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The government has announced that it is launching a new inquiry into the sale of travel insurance as part of a holiday package.

Economic secretary to the Treasury Ed Balls said that thousands of UK holidaymakers will suffer problems such as cancellations, lost items and medical problems this summer and it is important that they are properly covered for all such incidents.

Around 20 million people in the UK purchase travel insurance each year, which covers lost or stolen items, cancellation, medical expenses and other items. Brits made around 65 million trips abroad in 2004, almost half of which were package holidays.

Many people still opt for travel insurance as part of a package deal from travel agents. However, travel insurance sold as part of a package is currently exempt from controls places on stand-alone travel insurance.

'Our investigation will ask whether it's fair to put all the pressure on ordinary families to read the small print and ask the right questions to make sure they are properly covered,' Mr Balls said.

'It will ask whether the travel industry should be doing more to ensure families are not left high and dry on their holidays and whether we need to strengthen regulation to protect them.'

The review will involve the business community, a full public consultation and will consider the extent to which the travel industry has addressed the protection of consumers purchasing travel insurance.

It will also examine whether changes to the regulatory framework are needed to provide travellers with greater protection.

Axa Insurance estimates that more than two million UK holidaymakers have failed to take out travel insurance for holiday abroad. Meanwhile, the Financial Ombudsman Service claimed last month that complaints about travel insurance companies rocketed by nearly a fifth over the past year.


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