Travel insurance, one of the most abused, difficult and essential insurance policies of all, is coming under the official microscope in the UK. Treasury Economic Secretary Ed Balls has launched a public inquiry into the state of the local travel insurance market, calling on all industry stakeholders to prepare submissions, particularly on how standard insurance deals with terrorist incidents.

“In recent years there have been growing concerns from consumer groups and sections of the industry that the market is not working as well as it could, raising questions about whether regulation and appropriate redress should apply to the selling of travel insurance,” he said.

“We therefore need to get to the bottom of whether travel insurance sold with a holiday is being mis-sold and whether we need to be doing more to educate consumers.”

Mr Balls also addressed the Association of British Insurers this week. On November 23 he highlighted the important status of the insurance industry in the UK economy. He said he is working hard with insurers and the Treasury Select Committee to “strike the right balance” between consumer protection and regulation.