FSA ‘will intervene’ in travel insurance sales

ABTA has only bought agents a couple of years’ exemption from having to join the Financial Services Authority, the boss of a leading underwriting firm has warned.

Speaking at the Travel Industry Insurance Conference in London last week, Travel and Personal Underwriters managing director Jill Carnie said the Treasury’s decision to allow ABTA to regulate its members’ sales of travel insurance is unlikely to last beyond January 2007, when the opt-out comes up for review.

Carnie said: “I saw what happened when the Treasury introduced two sets of regulations in the life and pensions sector. It

didn’t work. You cannot have a situation where the client is being sold the same policy in two different ways.

“It is wrong to allow ABTA to regulate insurance sales. It will lead to confusion among customers and it’s not sustainable.”

Towergate Group marketing director Paul Dyer warned that joining the FSA was not easy for companies that specialise in insurance, never mind those for which it is a secondary product. There is a 30-page application form, plus two 30-page appendices to fill in.

It is also expensive. The fee for businesses with less than £1 million turnover is £1,100, rising to £24,500 for companies with turnover in excess of £25 million. On top of that there is an annual fee and training costs from £125 per person.

Dyer said high-street brokers are protecting themselves by joining networks created by underwriters, but warned that was not an option for companies that sell insurance as a secondary product.

“We are not going to appoint agents as representatives because if they make a mistake we go to prison, and we are not prepared to risk that,” he said.

ABTA head of finance Mike Monk said he was sure the association would be allowed to continue to regulate its members’ travel insurance sales after 2007.