THER recently released specifics
around the Default Insurance
Programme (DIP) have been hailed
by industry professionals as good news
for agents with the March 1 deadline
of Iata’s new local financial criteria less
than a month away.
It was originally communicated that
agents joining the DIP would still be
required to post a 12-month guarantee
with Iata.
However, Charmaine Brogden for Jack
and Seach Insurance Brokers, which is
the appointed agent to administer the
DIP on behalf of the insurer, Lloyd’s of
London, says any agent who currently
does not post a guarantee in favour
of Iata will be able to enter the DIP
scheme before March 1 without having
to post any guarantee.
She says, if an agent already posts a
guarantee in favour of Iata and wants
to join the DIP scheme, the agent will
be required to amend the beneficiary
in favour of the insurer once Iata has
confirmed that they no longer require
the guarantee. “If they opt to enter
the scheme after March 1, then under
the new Iata local financial criteria
rules, they will have already posted a
guarantee in favour of Iata and will then
need to amend the guarantee in favour
of the insurer instead,” she comments.
The stipulation that agents will need
to post a guarantee for the DIP should
they have a guarantee in favour of Iata
is simply an underwriting criterion, says
Charmaine. She says the more agents
that join the DIP, the more premium the
scheme can accumulate. The more
quickly the fund is built up, the sooner
Charmaine can approach the insurer
about removing that clause.
Industry professionals agree this is
good solution for agents with cash-flow
issues. “Agents have been worried
about posting the guarantee – not
everyone has that kind of money,”
comments Marco Cristofoli, md of
Harvey World Travel – Southern Africa.
Without doubt it’s a one-year lifeline
for smaller agents who don’t currently
have a guarantee, agrees Wally Gaynor,
md of Club Travel.
Rod Rutter, chief operating officer
of XL Travel, says while the expense
of paying R11 per ticket still means
the bank guarantee is first prize for
larger agencies that can afford it, for
smaller agents the DIP is now the best
route to go. He believes the industry
may yet see agents opting to ticket
through someone else, but says this
will depend largely on agents’ mix of
business.
However, Garth Wolff, ceo of the
eTravel Group, believes that a lot of
smaller agents will opt to pay the R11
per ticket. He is of the opinion that,
over the long term, the industry will
still see more agents giving up their
Iata licences but that in the short term
people will avoid change if they can.
“They will realise over time this may
mean they need to increase their fees
and, as a result, some will opt to go
the ITC route.”
Wally agrees, saying ongoing financial
and bureaucratic difficulties will
eventually wear agents down. “The
bureaucracy in dealing with the airlines
and Iata will not go away and this will
force many agents to throw in the towel
eventually.”
