Looking ahead to Parliament in 2007

The insurance industry has rarely had such a good year in Parliament, with new laws covering compensation, fraud and uninsured driving. However, looking ahead, the next Parliamentary session promises a few tougher battles.

At the top of the agenda is the threat to cut spending on flood defences. This has put the government and the industry on a collision course that could result in thousands of householders finding themselves denied cover for flood damage. The deal hammered out between the government and the industry in 2002 was simple: government ups spending on flood defences and insurers keep insuring people in flood-prone areas. The government now looks set to renege on its side of the deal, begging the question: why should insurers stick to their side?

So far, the Association of British Insurers has straightforwardly criticised the threat. Expect this to change if we are faced with a wet autumn and further flood damage. MPs will have plenty to say if their constituencies are affected by flooding and the ABI will need to keep close to those MPs to avoid any unjustified flak.

On the travel insurance front, the new Economic Secretary to the Treasury, Ed Balls, has asked for a review of the exemption from regulation granted to travel agents. This exemption angered many in the insurance market when it was announced in 2004, but was extracted from the government by the fearsome lobbying power of the travel sector.

Anecdotal evidence suggests that all the promises about travel agents cleaning up their sales act and the commission-heavy premiums they charge coming down have amounted to very little. The Treasury has asked for evidence of how this is working, but it needs more than the trade bodies to wade in - anyone with evidence of detrimental impact on consumers arising from the 'unlevel' regulatory playing field for travel insurance should get in touch with the review team at the Treasury.