WITH the travel industry
being non-regulated,
there are no industry
protections for travel agents
when it comes to claims
against them from clients or
other third parties.
It is, therefore, imperative
that travel agents take
out insurance to protect
themselves against risk.
Charmaine van Niekerk,
Club Travel HR and operations
director, says the company
has a number of different
insurances to cover its
businesses and protect
the company from risks.
Among these is Professional
Indemnity/Error & Omissions
Insurance (PI/E&O).
Carla Gillham, SATIB
Insurance Brokers
underwriting director, says
in her experience PI policies
are generally subject to there
being legal action following a
financial loss to a third party.
“For example, where travellers
miss their onward connection
because a travel agent gave
them the wrong visa advice.
In such a case, the traveller
would likely hold the agent
responsible for the additional
costs incurred and try and
recover these from the agent.
The agent can then claim
against their PI cover.” Carla
says a third party/client must
be able to prove negligence,
error or omission beyond
reasonable doubt.
Insurance broker Anel
Rochat, liabilities specialist
at Indwe Risk Services, says
when it comes to certain
travel agent claims, legal
action does not necessarily
have to be taken for a claim to
be settled by the insurer. “In
certain instances the travel
agent has to act immediately
to rectify an error such as
booking a room or a rental car
and pay for it immediately to
avoid further losses. In such
instances a client may not
take legal action against the
agent for suffering the loss,
yet the agent can still claim
from the insurer.”
Carla says there are times
when agents don’t want their
clients to know that they have
made a mistake in case it
jeopardises future revenue
streams. They try and hide
their error or omission by
paying the additional costs
and then claiming against
their PI insurance later.
“The problem with this is
that there are some important
PI cover requirements that
need to be adhered to, such
as telling your insurer as
soon as you become aware
of a potential claim, and
not admitting responsibility
or making any settlement
offers without the insurer’s
prior approval. If agents don’t
get prior approval, they may
very likely lose their right to
claim under their PI policy. If,
however, an insured is clearly
at fault or negligent, insurers
will normally settle without
the need for full legal process
to be followed, but this would
be at the insurer’s discretion.
Anel agrees that it’s
important for agents to
contact their brokers and
insurers immediately once
a claim is made, as the
insurer reserves the right to
appoint attorneys, pay the
claim, or assist the travel
agent in mitigating the costs
of the claim. She says where
a claim is made, the travel
agent can claim for costs
they incurred due to their
negligence, such as having to
pay extra to rebook a hotel
room because, for example,
the cost of the room has
gone up.
“Agents must also be
aware that PI does not cover
insolvency, so in the event
of a supplier such as an
airline or visa company going
insolvent, the agent cannot
claim for any monies lost.”
Similarly, PI does not cover
tour operator activities unless
it’s specified that an agent
is also involved in tour
operating. “Agents must
therefore ensure the tour
operator they’re dealing with
has proper liability insurance.
It’s also imperative that
agents ensure they have a
contract in place with the tour
operator that states they’re
not responsible for any errors
by the tour operator.”
But even though agencies
may try everything possible to
limit their liability, agents can
still be held responsible for
their client’s loss of income or
injury because the Consumer
Protection Act sees the
supply chain as the collective
responsibility of all direct and
indirect suppliers of goods
and services to the consumer,
says tourism legal expert,
Advocate Louis Nel.
Otto de Vries, Asata ceo,
says the association’s
regulatory study showed that
the risks for travel agents,
when it comes to protecting
customers’ money, is very low.
“While the transaction
volume on behalf of clients
for payment to suppliers may
be high, the actual amounts
per transaction are quite
small – R5 000 here,
R10 000 there – and claims
are rare.” For this reason, the
association recommends an
optional insurance product.
The only insurance that
is a requirement for Iataaccredited
agencies, in
lieu of a bank guarantee,
is the Default Insurance
Programme (DIP) scheme
for BSP Southern Africa.
“Because travel agents may
be collecting payments by
travellers for up to a month
before transmitting these
through BSP, remittances can
be quite large and a different
risk profile is therefore
attached,” says Otto. “Iataaccredited
agents who ticket
through BSP must therefore
either present a bank
guarantee that matches their
normal remittance cycles,
or participate in the DIP,
which is insured by Lloyd’s,
administered by Bastion Re,
and underwritten by Iataaccredited
Jack and Seach
Insurance Brokers in SA.”
At present there is no
protection for agents or their
customers when it comes to
airline bankruptcy, a major
bugbear Asata has with Iata.
Avoiding claims
“To avoid claims, agents
must advise clients of all
risk and all agency terms
and conditions, says Lynn
Howarth, Rennies Travel’s
chief operations officer. This
includes advising clients to
take out travel insurance,
says Lynn.
“Agents should also pay
close attention to flight
schedule changes, airline
booking cancellations,
changes to visa requirements,
valid travel documentation
and to the risk profile of
destinations clients are
travelling to, so they can
inform clients of these
changes.”
In the case of a dispute with
a client, Lynn advises agents
to respond immediately and
seek the fastest and most
economical way to resolve the
dispute so as to avoid costly
courtroom litigation. “Agents
must also immediately advise
their insurance company of
the claim.” She adds that
agents must understand what
they can and cannot claim
when it comes to PI. “Claims
for small amounts won’t be
covered because of insurance
excesses.”
Club Travel’s Charmaine van
Niekerk says agents must
train their staff on ethics,
transparency and duty of care
if claims are to be avoided.
“There is no doubt in our
consultants’ minds what
is expected of them when
dealing with customers. They
must advise clients of all
risks of purchase and of our
terms and conditions before
the client hands over any
money.”
The most common errors,
says Charmaine are around
visas, baggage – where
airline allowances differ by
piece or weight – and where
agents allow for too little
time between connecting
flights. “Consultants must
properly profile their clients,
consider the airport being
flown to, whether passengers
need to change terminals,
whether the travellers have
children or elderly members,
if the two connecting airlines
have interline agreements
or wether the travellers have
to collect and then recheck
baggage. All these will impact
travelling time.”
Carla Gillham, SATIB
underwriting director,
says errors on flights and
accommodation bookings
are the most common, but
that many of SATIB’s travel
agency clients have their own
checks and balances in place
to ensure the chances of
mishaps are minimised. “It’s
the larger errors that tend to
go the legal route and incur
significant costs. Sometimes
agents are sued when they
haven’t done anything wrong,
because a disgruntled client
decides to exercise his/her
discontent through the
legal system. That’s why
PI insurance should be a
business imperative.”
She adds that agents
must use a broker who
understands the needs
of the agency and can
recommend a suitable
product. “There isn’t a onesize-fits-all
approach. Europe,
for example, is governed by
the EC Directive law, which
has implications for the cover
required by travel agents.” PI
is compulsory for all Satsa
members.
Anel Rochat of Indwe Risk
Services, says the most
common error agents make
is forgetting to book a car or
hotel and that most claims
happen when agents are
making bookings for the
December holiday period.
“The only way to avoid claims
is for agents to do their
work with due care and skill.
Unfortunately, mistakes do
happen, which is why it’s
important to have a PI policy
in place. It can save an
agency a lot of money.”
Negotiating CPA
WHILE the supply
chain, according to the
Consumer Protection
Act (CPA), is the
collective responsibility
of all suppliers who
directly or indirectly
contribute to the supply
of goods and services
to a consumer, liability
is not ‘automatic’, says
Advocate Louis Nel.
“Claimants still have to
prove either breach of
contract or negligence.”
However, negligence
does not have to
be proved if liability
is absolute (CPA
section 61) – where
goods supplied are
unsafe, defective or
hazardous, or inadequate
instructions or warnings
pertaining to any
hazards arising from
or associated with the
use of the goods are
given, such as old and
faded warning labels or
instructions.
“Section 61 liability
is extremely wide.
Described as ‘harm’,
it includes death or
injury, illness, loss of or
damage to movable or
immovable property and
economic loss (loss of
income).
“The liability is also
joint, which means it can
be apportioned between
all parties involved in the
supply chain. It’s therfore
imperative for travel
agents, tour operators
and DMCs to have
proper T&Cs, indemnities
and insurance in place.
Contracts with thirdparty
suppliers must
include indemnities
and a proper vetting of
the supplier’s reputation
and risk management.
Travel agents must
inform passengers of all
risks pertaining to the
trip and make sure all
advertising, T&Cs and
booking forms are not
misleading or deceptive.
Unusual risks – those
not reasonably expected
or that may result in
serious injury or death –
must be explained and
drawn to the attention of
the passenger in plain
language, conspicuously,
and acknowledged by the
passenger and as early
as possible,” says Louis.
Accessing emergency assistance with speed
When it comes to
emergency assistance, the
best advice travel agents
can give their clients is
to call the TIC emergency
number directly, rather
than involving the agency,
says Noel Joseph, claims
manager at Travel Insurance
Consultants (TIC).
“This is the fastest way
that our emergency services
can spring into action
and provide assistance
for medical and nonmedical
emergencies.
We have trained staff at
our Johannesburg call
centre who can assess
the emergency and then
notify TIC’s worldwide
assistance partners to
render assistance, subject
to the policy’s terms and
conditions.”
TIC’s emergency
services can be contacted
telephonically by reverse
charge, via TIC’s real-time
online chatline, by SMS,
WhatsApp or email.
“In the case of a medical
emergency, if an evacuation
is required, TIC’s assistance
partners on the ground will
first have to assess whether
the injured policyholder is fit
to fly. An evacuation does
not necessarily mean the
patient will be transported
all the way to Johannesburg.
In Africa and in First World
countries, an insured will be
transported to the nearest
medical facility that can
provide medical assistance.”
Noel says sometimes
assistance, evacuation
or transfer to a suitable
medical facility cannot
happen immediately because
of inadequate infrastructure
on the ground, especially in
Africa.
“How long it takes depends
on the location, availability
of aircraft, suitable landing
strips and whether airports
operate 24/7.”
In Europe and the US,
the air ambulance option
is negated because of the
availability of nearby medical
facilities. In instances
where a policyholder has
to be moved for medical
treatment, TIC will cover the
costs of the move, when this
is covered by the policy.
Noel says agents should be
aware that the repatriation
of mortal remains can
take days and even weeks
because of logistical issues
and red tape. “That applies
across the world, but it
generally takes less time in
First World countries.”
TIC has various products
tailored to different market
segments, from seniors and
business travellers to youth
and sports travellers. For
comprehensive cover, Noel
recommends TIC’s Leisure
Comprehensive cover, which
offers the most benefits and
highest limits. He advises
that cover provided to credit
card holders by credit card
companies – even with
top-up cover, is not as
comprehensive as the cover
provided by a TIC policy.
