AGENTS are still not buying
into the benefits of entering
the Default Insurance
Product (DIP) scheme,
despite an indefinite
reprieve from having to post
a guarantee to enter the
scheme. As a result, uptake
of the product has been
surprisingly slow, industry
authorities say.
TNW last reported that
insurer of the DIP, Jack and
Seach, had announced
concessions for agents
wanting to join the scheme
(see TNW, May 18). At
the time, the facilitator of
the scheme said this was
to counter the effect of
potential confusion as a
result of the quick roll-out of
the DIP.
“Although more agents
have signed up for the
scheme, we need to see
more big agencies come in,”
says Ian Snowball of Bastion
Reinsurance Brokerage,
which facilitates the scheme.
The policy is up for renewal
in March. Ian says the longterm
goal would be to get
the entire market on board
so that any agency would be
able to enter the scheme
without paying a guarantee
for whatever amount they are
trading.
Ceo of Asata, Otto de
Vries, says the relatively slow
uptake of the DIP is primarily
due to lack of understanding
of the product and its
benefits.
Dinesh Naidoo, group
operations director of
Serendipity Worldwide Group,
says he is surprised more
agencies haven’t entered the
scheme. “It opens up your
cash flow and there is no
risk because you are covered
by policy. Even with a
guarantee, there is the doubt
that it may be insufficient.”
He says when paying per
ticket, agents are also able
to budget for the additional
cost by passing on that cost
to their clients.
However, other industry
players say that the DIP may
not always be an agency’s
best option.
Mladen Lukic, gm of Travel
Counsellors South Africa,
says the pros and cons of
entering the DIP scheme
would differ depending on
the agency in question’s BSP
size and the strength of its
cash flow.
Franz Von Wielligh, gm
of Flight Specials, says
especially where agents are
working on tight margins –
as with government accounts
where service fees paid to
agents are being reduced –
the R11 DIP cost per ticket
has an impact on the bottom
line.
He says, however, that Iata
is re-evaluating guarantees
at the end of the financial
year that might see a spike
in DIP uptake once again.
Jack & Seach, which
administers the DIP, will
join Asata on November 4
for a webinar for agents who
are interested in learning
more.
