Financial guarantees – Iata offers new option

I
ATA has introduced another
alternative to posting a
financial guarantee. The
new Global Default Insurance
(GDI) programme is part of the
NewGen ISS programme and
aims to offer agents greater
flexibility and choice when
providing financial security.
The Global Default Insurance
(GDI) is a form of voluntary
financial security recognised
under Iata resolution 850p,
which Iata will accept from
a travel agent as part of the
Iata accreditation process.
With the roll-out of GDI,
South African agents have
three alternatives to provide
financial security: putting up
a guarantee with Iata;
taking out the local Default
Insurance Programme (DIP),
which is based on a flat perticket
fee and was introduced
in February 2016; or signing
up to the new global
default option.
The new GDI programme will
be brokered jointly by Marsh
and Aon to Euler Hermes,
a global credit insurance
provider and subsidiary of the
Allianz Group. The product is
supported locally by Marsh
and globally by Aon and
Marsh.
Perry Flint, head of
corporate communications,
the Americas, of Iata, said
the new GDI policy was
not intended to replace
or exclude other security
types, including local default
insurance programmes. Perry
advised that the aim of the
policy was rather to provide
a cost-effective and flexible
alternative to bank guarantees
and other types of security.
It will also allow agents to
amend their insured amounts
in a relatively quick time
frame, thereby raising their
capacity for cash sales.
Should an agent choose
to go ahead with the GDI
option, Perry explained that
the provider would calculate
the cost of coverage for the
guarantee amount required
by Iata. Once the agent and
provider had agreed on the
costs and coverage value,
Iata would then invoice and
collect the amount due from
the agent on behalf of Marsh.
Ongoing payment for the GDI
policy would be collected by
Iata together with the annual
agency fees.
According to Charmaine
Brogden, DIP administrator SA
of Jack and Seach Insurance
Brokers, which currently offers
the local default insurance
programme, 33% of Iataaccredited
agents in Southern
Africa are insured under the
programme.
At the time of publication no
response had been received
from Marsh regarding the cost
of an average agency GDI
premium.