Mr. and Mrs. Wall (Holiday Insurance) (Hansard, 11 March 1982)

§ Mr. John Heddle (Lichfield and Tamworth)

I am very grateful to you, Mr. Deputy Speaker, for affording me the opportunity to raise an issue which directly affects .5 million or more people who are currently contemplating where to take their holidays this summer. Some will explore some part of England's green and pleasant land while others will seek adventure farther afield. The vast majority will book a package holiday with a recognised tour operator, who will probably be a member of the Association of British Travel Agents. In so doing, the majority of package holiday makers this summer will run the dire risk of being inadequately covered for insurance purposes should some personal accident befall them due to circumstances entirely beyond their control during their holiday.

In illustration of my contention, I propose to describe briefly to my hon. Friend the Under-Secretary of State for trade, whom I am pleased to see in his place—I take the opportunity of apologising to him for detaining him and delaying his departure to points north of the border—the case of Mr. Robert and Mrs. Sheila Wall of 12 , Barcliffe Avenue, Tamworth.

In 1976 Mr. and Mrs. Wall booked a holiday with a firm of tour operators that is well known to the House—Silver Wing Holidays, which is a subsidiary of British Airways—and that holiday took them to the Martina hotel in Tenerife. As was the custom in those days—indeed it is still the custom—Mr. and Mrs. Wall were given the option by the tour company of effecting a personal accident insurance policy to cover the loss of one or both limbs, total or irrecoverable loss of all sight in one or both eyes or permanent disablement to the extent of £1,400. The standard form of cover that is more commonly effected today is not £1,400 but £5,000. I stress that this personal accident cover is not obligatory. The holiday-maker has the opportunity of telling the tour operator that he or she has no wish to effect such cover. It is not obligatory; it is discretionary.

In the case of Mr. and Mrs. Wall there was no clause in the booking form, or the booking conditions, excluding the tour operator from liability for personal injury caused to them, nor was there a clause in the booking form indicating that the tour operators did not own or control the hotel, the Martina hotel in Tenerife.

Mr. and Mrs. Wall had the misfortune to stay at the hotel at a time when it caught fire. Although the hotel, no doubt, complied with the national and local regulations on hygiene, fire and general safety, and whose condition no doubt satisfied the representatives of the tour operators, Silver Wing Holidays, which I have no doubt made regular and periodic inspections, the secondary fire escape, an external fire escape with a wrought iron gate at the bottom, was padlocked as a security measure during the night. I imagine that that was so not only on the night in question but on most nights.

Mr. and Mrs. Wall became trapped in the hotel on the night of the fire. Their only means of escape was by knotting sheets together, throwing the sheets out of the window and trusting their luck that the sheets would hold 1061 until they reached terra firma. Inevitably the sheets broke, and Mr. and Mrs. Wall fell to the ground from a great height. Mrs. Wall sustained injuries so severe, extensive and critical that she is now permanently disabled and destined to spend the rest of her life in a wheelchair—a dismal prospect at the age of only 43.

Mr. and Mrs. Wall returned home, claimed on their personal accident insurance cover and received the sum for which they had insured of £1,400. They also decided to sue the British Airways subsidiary, Silver Wings Holidays, for damages which they had sustained. I should add here that there is no evidence whatsoever of negligence on the part of the tour operator in selecting the hotel for inclusion in its brochure. I should further add that in raising this case tonight, I am implying no criticism of British Airways or of their tour subsidiaries, Enterprise Holidays, Sovereign Holidays or Silver Wing Holidays. The executives of these companies have all along been extremely sympathetic to Mr. and Mrs. Wall's plight. Indeed, both they, their solicitors and I, in dealing with this case for some months now, have received nothing but the closest co-operation from the company concerned.

Mr. and Mrs. Wall pleaded their case here in the Queen's Bench Division in Birmingham before Mr. Justice Hodgson in November. They pleaded their case on the basis that there was a contract between the tour operator and the customers to provide hotel accommodation, and that there was an implied term in the contract that the accommodation was reasonably safe for the purposes the customers of the tour operator were invited to be there. It was further pleaded that, as a result of the wrought iron gate being locked on the night in question, there was a breach of implied care, and that, as a result of that breach, Mr. and Mrs. Wall were injured.

However, their case was further complicated because of the nature of the contract between the customer and the tour operator and, of course because the hotel was in Tenerife, which is outside the jurisdiction of English courts. The Walls' case was even further complicated because of the intricacies and uncertainties of international legislation.

For those and other reasons which he set out in his judgment in some detail, Mr. Justice Hodgson summed the case up thus: with considerable regret but with no hesitation I acquit the Defendants (Silver Wing Holidays) of negligence. With hindsight, Mr. and Mrs. Wall would have been in a better position today if their personal accident cover had been set at a more realistic level. However, they probably thought, just as 5 million holidaymakers sitting at home browsing through seductive brochures today are thinking, and just as I thought when I booked my first package holiday some 20 years ago—"It can never happen to me".

In describing the tragic case of my constituents, I seek to highlight the fact that, in view of the problems of international litigation and the difficulty, in any event, even if one is successful in litigation, of enforcing court judgments in other countries, the package holidaymaking public are at great risk from the wilful or innocent negligence of others in general and hotel operators in particular, if they do not include in their holiday baggage a realistic personal accident cover.

I therefore suggest to my hon. Friend, at least in the case of holidays taken with a subsidiary company of the 1062 nationalised airline, and if it is possible with those companies reputable enough to the members of the Association of British Travel Agents, that personal accident cover should be mandatory, and that it should be set at a more realistic level than the discretionary personal accident cover incorporated in holiday booking forms, as I described, of £5,000. I suggest that a realistic personal accident cover should be £15,000 per person per fortnight, three weeks, or month.

I understand from the British Insurance Association, which supports my proposition in principle, that the premium on £15,000 per person would be about £1 per thousand, which is a £15 once and for all payment, compared with the standard rate of discretionary cover of £5,000 where the premium is £8.50. If the British Insurance Association and the insurance industry generally—which leads the world—were to effect a global insurance package for 5 million package holidaymakers, the premium would be considerably reduced on a quantity discount basis.

That is the first proposition that I wish to put to my hon. Friend—that the great British public should be better protected against personal accidents sustained while on holiday abroad due to the negligence, either wilful or innocent, of others to the level of £15,000 and not £5,000. Secondly, the package holidaymaking public may be given greater protection and a more satisfactory solution may perhaps be found in arbitration. I commend to my hon. Friend the suggestion that has been brought to my attention by the Chartered Institute of Arbitrators that arbitration contracts should be entered into by tour operators and the overseas hotel operators to enable tripartite arbitrations to take place when appropriate. That would also give much greater protection to the holidaymaker.

We know that we cannot leave the House tonight in a motor car that does not have a current insurance policy. My hon. Friend the Member for Northwich (Mr. Goodlad) would also agree that if our houses are mortgaged with a building society a condition of the mortgage is that we must effect comprehensive insurance cover. On the same basis, is it not reasonable to suggest that if one is putting one's life into the hands of others—some Continental hotels are known to have lower safety standards than hotels in Britain—one should be adequately protected, especially if the consequences of the wilful or innocent negligence of others lead to such dire and far-reaching circumstances as occurred to Mr. Robert and Mrs. Sheila Wall of Tamworth?

Had either or both of the solutions that I am putting forward tonight been adopted when Mr. and Mrs. Wall booked their holiday of a lifetime in Tenerife they would not be in such tragic and dire straits today.

§ The Under-Secretary of State for Trade (Mr. Iain Sproat)

My hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) has described the very distressing experiences of Mr. and Mrs. Wall, whose holiday had such tragic consequences. I should like to place on record my own sympathy for the unhappy position in which they now find themselves. At the same time, I must commend my hon. Friend on his decision to raise this matter in order to focus attention on the wider issue of holiday insurance.

I should first like to describe briefly the structure of the package holiday industry and the present arrangements for 1063 providing holiday insurance. The principal trade association for the travel industry is the Association of British Travel Agents, or ABTA, as it is frequently known. Its members are either tour operators who put together and provide holidays, usually in a packaged form, or retail travel agents whose job it is to sell the tour operators' products. Some ABTA members will operate in both classes. All members are required to observe codes of conduct as a condition of their membership. Compliance is monitored by ABTA, and from time to time by the Director General of Fair Trading, who has given his support to those codes.

Under the current code for retail agents, they are required to draw the attention of their clients to the insurance facilities and cover available for the holiday and to indicate any exclusions and limitations so that their clients may seek additional cover if deemed desirable or necessary.

Tour operators under their code are not permitted to print insurance details on the booking forms in their brochures unless the same details are provided separately to each client on or before confirmation of the booking. This ensures that the client will be able to retain a copy of the details of insurance available to him. Operators generally make clear in their brochures the importance of insurance and some go so far as to ask the client for the name of the insurer being used if the one provided by the operator is not being accepted.

There is keen competition among insurers for travel insurance business and policies are constantly reviewed to meet the requirements of the travelling public. British Airways, for example, has negotiated special holiday insurance schemes for its clients taking its Sovereign and Enterprise holidays with Home and Overseas Insurance Co. Ltd. For its Speedbird Flydrive holidays, a scheme has been arranged with Norwich Union. Both insurers are United Kingdom authorised.

It is clearly a matter for holiday organisers, such as British Airways, which insurance policies they choose to offer their clients. Personal accident cover now offered by British Airways' insurance is for £5,000 for permanent total disablement. The cover in the Extrasure policy offered by ABTA is the same, although medical expenses can be covered up to £50,000, or more in certain circumstances. If a holidaymaker wishes to obtain higher cover for personal accident he may seek advice from brokers, agents or insurers direct, but he will have to pay a higher premium for more cover.

Apart from the efforts of tour operators and retail agents to bring insurance cover to the attention of their customers, the Office of Fair Trading has produced a leaflet about package holidays, including insurance cover. The leaflet is available through local consumer advisers, many public libraries and from the Office of Fair Trading itself. In the section on insurance, the leaflet underlines the importance of taking out insurance at the time of booking a holiday. It goes on to suggest that the insurance provided in the holiday brochures should be compared with the schemes which the travel agent can arrange independently.

Alternatively, it goes on, the holidaymaker may make his or her own arrangements with his or her own insurance company. I need hardly add that this advice from the Office of Fair Trading applies whether or not a holiday is booked through or with an ABTA member. The Foreign 1064 and Commonwealth Office, through its Passport Office, issues an essential information leaflet of advice for United Kingdom passport holders who travel abroad. This has a section on insurance which stresses the need for taking out insurance against illness and injury and for making sure that the cover is adequate.

My hon. Friend has suggested that we should seek to persuade ABTA to make the provision of insurance compulsory with all package holidays and I should like to say something about the Government's attitude towards compulsory insurance particularly.

The legal obligation to take out private insurance has always been imposed sparingly, usually to ensure that those who suffer injury or bereavement as a result of an accident caused by someone else are not deprived of the compensation due to them through that person's inability to pay.

Compulsory third party motor insurance, which my hon. Friend rightly mentioned, is an example with which we are all familiar. A system, however, of first party insurance against risks voluntarily undergone—I am sure that my hon. Friend will accept that it is unlikely that people will travel abroad on holiday except of their own free choice—would, I believe, be something of a departure. I also suspect that effective enforcement would prove troublesome to the traveller and would be unlikely to be generally popular.

If the Government are not prepared to impose an insurance requirement on package holidays, it seems to me that it would not be defensible for them to seek to persuade ABTA—or any other body—to do so. I am satisfied that there already exist satisfactory arrangements to ensure that potential holidaymakers are made aware of the importance of taking out insurance cover and that there is cover widely available at reasonable cost.

As to the second suggestion made by my hon. Friend about arbitration, he will know that ABTA already supports the arbitration scheme for the travel industry rt. n by the Chartered Institute of Arbitrators. I understand that the institute's latest suggestion represents only its initial thoughts on the subject. To succeed, such a proposal would also require the agreement of overseas hotel operators. I am sure that ABTA will take very careful note of my hon. Friend's remarks, but again I do not see this as being an area for Government intervention.

The case described by my hon. Friend is a very sad one. I have no doubt, too, that some other holidaymakers suffer mishaps of varying severity. It will be of little comfort to Mr. and Mrs. Wall and to other sufferers, but the fact remains that the vast majority of holidaymakers on package holidays abroad return home without the need to call upon their insurances.

Even though I do not accept that there is a need for Government action on the lines requested by my hon. Friend, I believe that he has performed a useful service by focusing attention on the issues raised by his constituents' unfortunate experiences. If, as a result of this short debate, holidaymakers are persuaded to take a closer look at the need for, and the cover of, holiday insurance, he will have rendered a very valuable service.