Lata Default insurance coming soon

LATA’s Default Insurance
Programme (DIP) is in the
final stages of approval and
will soon be available to all
travel agents in South Africa.
Asata has been working
closely with Iata’s APJC
(Agency Programme Joint
Council) to establish a
default insurance product to
protect travel agencies. The
association resurrected talks
with members of the APJC in
May last year. In the latest
Asata newsletter, ceo, Otto de
Vries, said the new insurance
programme would be available
within a few months.
The Default Insurance
Programme is already available
in other parts of the world and
has proved to be an effective
solution for both airlines and
agents to ensure financial
security for the airline industry.
The programme is designed to
indemnify Iata airline members
against loss from the financial
default of a ticketing agent
enrolled in the programme
up to an agreed limit. The
DIP is an alternative to the
bank guarantee initially being
collected from the agents as
collateral.
Lidia Folli, chief financial
officer of Tourvest Travel
Services and chairperson
of the APJC, says up until
now the programme has
not been available in South
Africa because Iata hadn’t
identified a suitable insurance
provider that answered all
the necessary and stringent
requirements imposed by the
association.
However, Iata has now
identified a suitable provider
in South Africa and is “quite
far down the line in the
accreditation process” says
Lidia. She explains that, in
general, the accreditation
process takes between 60
and 90 days but it can take
longer if Iata requires more
information. “Only once the
insurance provider has been
approved will we know more
about the details of the DIP .”
The possible advantages of
a DIP as opposed to a bank
guarantee will depend on
the size of the travel agency,
Lidia says. She says there is
often a misconception that
the DIP is more suitable for
smaller agencies and the bank
guarantee is more suitable for
larger companies. The truth
is that the bank guarantee
is calculated on the annual
number of cash BSP sales.
Therefore, sometimes a bank
guarantee could prove to be
more advantageous for a small
company with few cash sales,
she says.