Defaqto, the financial products researcher, has welcomed the FSA's decision to regulate all
travel insurance policies.
The FSA recently announced it would look to regulate policies that are sold as part of a package with a holiday, and tour operators and travel agents will now have to work closely with the regulator to ensure compliance.
But the change will be gradual, and full regulation is not expected until early in 2009.
Defaqto argued that there was never a good reason to put all travel insurance under different regulatory regimes, and this new set-up will simplify and make easier the task of regulation.
Additional cost to the consumer had been estimated as being as much as £250 million by the consultancy, given the additional cost these travel policies often added to package holidays.
Even though the cost of policies sold by tour operators and travel agents had dropped recently to be more in line with those sold independently, there was often confusion as it was not explained to customers what their policies offered, said the financial products researcher.
Brian Brown, head of insight at Defaqto, thought that in the long term the greater regulation might move these travel agents away from the insurance business: "[Travel agents and tour operators] may decide to form partnerships with insurers and simply pass their customers over to third parties to arrange travel insurance," he said.
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