DESPITE the big outlay of cash, the
majority of South African travel agents
have chosen to stick with posting an
Iata financial guarantee rather than
opting to join the Default Insurance
Product (DIP) scheme.
It’s been three months since the
launch of the DIP – an alternative
solution to posting a guarantee
according to Iata’s new local financial
criteria (LFC) which came into effect
on March 1 – which allows agents to
pay per ticket. Since then, 112 agents
have joined the scheme, about 25% of
the available market, says Charmaine
Brogden of Jack and Seach Insurance
Brokers, the appointed agent to
administer the DIP on behalf of
insurer, Lloyd’s of London.
“We would have liked to have
seen around 50% uptake,” says
Charmaine, adding that the scheme
would benefit from critical mass, as
the guarantee requirement could then
stand to fall away.
Iata’s new LFC presented agents
with an adjusted minimal financial
guarantee of R160 000 for weekly
remittance, R250 000 for fortnightly
and R500 000 for monthly
remittance. The DIP presented agents
with the alternative of paying a cost
per ticket rather than posting a
guarantee, as long as they entered
the scheme before the March 1
deadline. Those agents who already
had a guarantee in favour of Iata
before the new LFC kicked in were
still required to post a guarantee
whether they entered the DIP scheme
or not. “It is hoped that on renewal
of the insurance product that this
requirement will fall away, however
this will depend on the uptake and
performance of the facility,” says
Charmaine.
The conservative uptake may be
because agents are confused by or
unaware of the full list of options
available to agents, she says. “In the
initial phases, we had many agents
phoning, trying to understand how the
scheme operates. It soon became
clear that many agents did not realise
they could opt for a combination of
DIP and a bank guarantee in favour
of Iata.
