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News » Archives » May 2005 » Agents' Insurance Crisis

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11/05/2005: "Agents' Insurance Crisis"


Agents could be forced to pay "up to £50,000" for replacement insurance policies for clients following the collapse of broker Whiteley Insurance Consultants. Some, such as Knock Travel in Northern Ireland, are choosing to foot the bill after confusions arose over whether a compensation sceme run by the Financial Servies Authortiy would provide cover.

When an insurance firm goes bust, customers are usually protected either by the underwriters, who honour the contract, or by the FSA, through its Financial Services Compensation Scheme. But because agents are exempt from FSA regulation it remains unclear whether customers would be covered by the scheme.

Abta head of financial services Mike Monk described it as a "bitter irony" that agents, who were not being regulated, were being held responsible for the collapse of an FSA-regulated company. Thousands of customers were left with "worthless" policies after Whiteley, which also traded as Kingfisher Travel Insurance Services, went into provisional liquidation last week. Although the situation is still being assessed, the advice as TTG went to press was that the FSA's compensation scheme would not offer protection if underwriters did not pay up.

Knock travel owner Doreen McKenzie, who is also treasurer of the Consort Travel Group, which used Whiteley as a preferred provider, said: "Every day of indecision is costing us our reputation. Financially, some companies could lose up to £50,000."

Journeys Travel Insurance managing director Partick Chong said: "It concerns me that the FSA has allowed ths, considering the main reason for regulation is to protect the consumer."

He added that Abta should have ensured members explained the lack of protection when they sold policies.

(this article was taken from the Travel Trade Gazette and was written by Simon Crawshaw)