As the Financial Services Authority finally ushers in new regulations to guide the sale of travel insurance, many people will certainly hail this innovation. In the same vein many people may see it as counterproductive and unnecessary.
The rules, intending to provide more protection as well as guidance for people taking out travel insurance in the UK, is billed to come into force on January 1, 2009. But the stage seems fully set for the take-off.
In a couple of weeks’ time the FSA will throw the doors open for applications to be sent in by those wanting to be registered with them as members or representatives of intermediaries. This is a necessary step to enable them continue the sale of the policies as stipulated by the new rules.
Why the new regulations, one may ask? It had been observed that travellers were always ending up with the wrong policy as a result of inappropriate counselling. In the end people expecting to find certain features in their policy find out that such things are not part of the deal. This problem arises from the fact that travel agents usually sell travellers the insurance policy bundled with holidays.
Also, in the event of any disputes, where things went wrong, it was found that travellers often discovered that they were not granted the same level of redress.
Investigating the claims and the circumstances surrounding them the regulatory body came to the conclusion that travel agency staff selling the policies were not usually trained for the job. And policyholders were not properly told of the terms of the policy being sold to them while taking it out.
These findings informed the decision to amend the rules and make it compulsory for travel agents to register with the authority as members or representatives of intermediaries to be able to sell the cover. This will require formal training for staff who are entrusted with the responsibility of selling insurance to travellers.
As much as the main intent is to provide greater customer protection and satisfaction, the changes would lead to a higher level of professionalism in the sale of travel insurance. More so, it will help in forestalling the likely crisis that would arise from the sale of inadequate or unsuitable cover to travellers.
But the new regime will not come without opposition. While many claim it is timely and appropriate, there are groups who think it will not only take away business from their affiliates, but it will also erode the enthusiasm among travellers to purchase the cover. The Association of British Travel Insurers (ABTA) is one of those with such belief. A spokesman for ABTA recently warned that the move could affect both the agents and people taking out travel insurance, leading to fewer sales. “There are surprises here. Some of our members are likely to stop selling insurance and fewer people will travel with insurance,” he was quoted saying.
Whether such claims will turn out to be real or not remains to be seen. What is crucial at the moment is the take-off date and preparations on ground. FSA director of policy and themes, Dan Waters said that firms had been advised to apply well in advance of the start of the new scheme.
“Regulation is only seven months away and firms need to make sure they are fully prepared. We start accepting applications next month and firms are advised to apply early to ensure that they are ready in good time for the start of the new regulation next January,” he added.
As we await these rules to come into force, it’s hoped the desired results will be achieved, especially as Mr Waters said their rules have been designed to secure protection for customers.
Musa is an author of several articles pertaining to Travel Insurance. He is known for his expertise on the subject and on other Business and Finance related articles.