Millions of people with long-term illneses are ‘poorly served’ by the travel insurance market, meaning they face sky high prices for cover or are forced to forego the protection all together, the Financial Conduct Authority (FCA) said.

It said with at least 15 million people in the UK currently living with at least one long-term health problem, and numbers predicting to rise to 18 million in the next decade, more needs to be done to improve access to insurance for this group.

The FCA said it will work with key industry stakeholders to create a new service to redirect customers to specialist providers.

Christopher Woolard, executive director of strategy and competition at the FCA, said: “People with pre-existing medical conditions feel poorly served by travel insurance. There are specialist services out there, but often people don’t know where to find them. We’ll work with industry to point people in the right direction and help dispel some of the myths and misunderstandings to ensure this market works better.”

Last year, the regulator launched a review into whether cancer patients are treated fairly when buying insurance and it heard a number of stories from holidaymakers about their experiences buying cover.

In one case, a physically active 58-year-old woman had skin cancer diagnosed seven years ago. After the cancerous area was removed and following regular check-ups over a five-year period, she was declared cancer-free. But she has struggled to get travel insurance by declaring the condition and hasn’t had any quotes for cover returned.

In another case, a traveller was diagnosed with low grade bladder cancer and a travel insurance policy for six days in the States cost £450, despite the holidaymaker not requiring any ongoing treatment.

From the responses of the study, the FCA found the following:

• A lack of quality information on alternative options available to consumers after they had received a high quote or had been refused cover, which can cause consumers to assume that they are uninsurable.
• A general lack of understanding among consumers and firms around insurance terms and the risk factors that are considered by providers when calculating the premium.
• The lack of transparency around pricing, the risk factors which drive quotes and how premiums are calculated which limits consumers’ awareness about their options and can mean that they have difficulties in finding competitive insurance that is appropriate for their medical condition.

Melissa Collett, professional standards director at the Chartered Insurance Institute, said one in three people living in the UK are likely to get cancer at some point in their lives  so “it’s absurd this large group are prevented from travelling because they cannot get insurance or worse, forced to risk travelling without it.”

She said: “Many people living with cancer and those in remission live healthy and full lives and we should be doing all we can to support them in this.”

Fran Woodard, Macmillan Cancer Support’s executive director of policy and impact, said: “We welcome these commitments to make it easier for people with cancer to find suitable travel insurance, but we are disappointed these proposals do not go even further. Improved signposting will only benefit people with cancer if, at the end of it, there is fair and affordable cover available. As it stands, this is rarely the case.”