Insurance- check the fine print

ARE clients who buy travel
insurance covered in the
event of the bankruptcy
or financial default of a travel
supplier? The answer seems
to depend on the interpretation
of what constitutes a ‘travel
supplier’.
Recently, the collapse of
Low Cost Holidays Group
and Gateway2Travel showed
that the ‘supplier insolvency’
insurance is not always as
effective as the name of the
policy would suggest.
eTravel’s Tammy Hunt told
TNW that eTravel dug into
its own pocket to assist
clients and ITCs affected by
Gateway2Travel’s insolvency.
“We didn’t even submit claims,
as the policy states that it
will not cover tour operator
insolvencies.”
Indeed, the exclusions in
some policies state that travel
supplier insolvency will not be
covered if travel arrangements
form part of a tour operator
package and/or an all-inclusive
package.
The fine print in Zurich’s
policy exclusions stipulates
that insurance will not pay
for the insolvency of “any
travel agent, tour organiser,
booking agent or consolidator
responsible for booking your
travel accommodation”. Also
losses from fraud or negligent
misrepresentation by the travel
supplier are not covered.
When asked about these
exclusions, Anriëth Symon,
head of Travel at Zurich
SA said it defined a ‘travel
supplier’ as a licensed
operator in SA. Licensed
operators include a scheduled
airline departing from South
Africa, including all connecting
and onward flights forming part
of the insured journey; a cruise
line; a rail or coach operator; a
car-rental company or a hotel.
“Taking the above into
consideration, we may
encounter claims where the
travel supplier may not meet
the policy definitions 100%.
We review the claim on a caseby-case
basis and consider
how best to apply the policy so
as to ensure a fair outcome,”
she said.
Also Hollard Travel Insurance
assesses claims on a caseby-case
basis. Uriah Jansen,
md of Oojah Travel Protection,
which administers Hollard
Travel Insurance, said the
supplier insolvency offered
by Hollard also excluded
insolvency of tour operators.
“A tour operator is not the
supplier but rather acts as
a middleman between the
supplier and end user. This is
deemed an uninsurable risk.”
However, Uriah said although
the Supplier Insolvency Cover
didn’t generally include tour
operators, they would assess
every claim on a case-bycase
basis. In the event of
Gateway’s demise, she said
Hollard Travel Insurance did
compensate clients for their
losses, even though Gateway
was an aggregator and
therefore actually fell outside
the scope of the cover.
So, does this insurance
still offer a worthwhile cover
for your clients? “Yes,”
said Uriah, adding that
travellers would be covered
for airline financial default
or direct supplier default,
such as accommodation
establishments.
According to Anriëth,
travellers have become more
aware of and concerned about
the insolvency of airlines
and travel suppliers. “We
are receiving more and more
requests for this specific
cover due to the challenges
presented by the current
economic climate.” ■