THERE are just six months to go before the launch of an insurance regulatory body that promises to have a huge impact on agents’ ability to sell travel insurance.
The General Insurance Standards Council, which starts operation in January 2000, is being set up by the insurance industry in an effort to regulate itself rather than come under the Government’s Financial Services Authority.
Its aim is to monitor and control the way all insurance is sold, and field complaints from consumers sold wrong products.
How the GISC will operate is still being decided by the insurance industry, but it looks increasingly likely that agents will have to register with the body after proving competency to gain their licence to sell, possibly by taking an exam.
Association of Insurance Intermediaries and Brokers chairman Michael Slack said: “Travel agents will not escape regulation because intermediaries, which will have to join the GISC, will demand those who sell their policies are also members.”
He predicted half of the UK’s travel agents would fail to meet new standards and have to stop selling travel insurance.
However, Hamilton Barr director Michael Pettifer, who is on the Association of Travel Insurance Intermediaries’ GISC sub-committee, said nothing has been decided.
As it is in negotiations, the ATII refuses to comment on the GISC, but Pettifer said: “I believe it is likely agents will have to register only if they sell insurance from more than one provider.”
Intermediaries might be prepared to accept liability where there is an exclusive deal with an agent as there will be no doubt which policy has been sold in the case of complaint.
Ketteridge general sales manager Doug Weston said: “If a broker accepts liability, the agent will have to be tied for at least a year to make it worthwhile taking the risk. It would be to the agents’ advantage to get registered.”
Most insurers agree that efforts to improve standards are a good thing. Voyager director Aubrey Abbott said: “It should be seen as a positive step to make sure travel insurance is sold professionally.
AON travel insurance services managing director James Beagrie added: “If everyone is operating under the same standards, people will not be able to accuse agents of not knowing what they are talking about.”
Journeys Travel Insurance managing director Patrick Chong said agents should have to sit a simple test on insurance and take a refresher exam every three years.
There are concerns that agents are blind to the impact of the GISC. GE Capital Travel Insurance Services head of sales and marketing Lisa Garton said: “We have spoken to our agents about it but I’m not sure they understand the implications.”
“If regulation is imposed and properly policed we will see a fallout of agents able to sell insurance.”
ABTA president Stephen Freudmann said if the GISC raises standards in all the sectors now selling travel insurance, it will be no bad thing. But he added that the cost of registering and arbitration needs to be met by the insurance industry.
As owner of independent travel agency Majestic Travel, he added: “I am reasonably confident my staff are aware of the complexities of the insurance product, but I would be happy to do more training.”
Thomas Cook head of UK consumer marketing Simon Martin said a new computer-based insurance training program is being introduced at the end of the year.
“We believe we shall be in a strong position when the GISC is formed,” he added
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