ABI rejects airline insolvency proposal

ABI rejects proposals for airline insolvency cover to be made a mandatory element of standard travel insurance policies.
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Travel insurance

The Association of British Insurers (ABI) has rejected proposals from the UK Government for airline insolvency cover to be made a mandatory element of standard travel insurance policies.

Responding to the findings and suggestions of the Airline Insolvency Review from the Department of Transport, the ABI has said that as travel insurance is already an incredibly competitive and challenging marketplace in which to operate, the addition of an extra compulsory level to standard cover – and all the complexities and challenges that would come with it – would be ‘an unwelcome disruption’. Customer choice would be more limited as a result, and take-up could also suffer as premiums would need to go up.

The issue, as far as the ABI is concerned, is not the cover that it is available, as much as a lack of awareness among the travelling public of what is already on the market. While it rejects the suggestion of adding airline insolvency cover to standard policies, it does support the Review’s assertion that ATOL protections be extended or replicated across all airlines (rather than merely those that are part of package holidays). The ABI also supports a wide-ranging analysis of where there are currently gaps and overlaps in consumer protections.

“[While] we are fully supportive of measures that improve the level of protection consumers have [while] travelling abroad, the primary design of travel insurance is to cover the cost of expensive medical treatment,” said Charlie Campbell, the ABI’s Senior Travel Policy Adviser. “Introducing mandatory airline insolvency cover ignores the real issue of lack of awareness of cover already in place, [while] increasing costs and confusion.”