TNW pick of the week: Schengen visa insurance fraud – be warned!

By Dorine Reinstein

With Schengen visas becoming more expensive and the requirements more stringent, travellers and travel agents are finding creative ways to beat the system.

Be warned though! Travel agents could pay dearly for helping travellers get away with fraud, travel insurers warn. South African travel insurance companies have reported instances of travellers and travel agents cancelling the prerequisite travel insurance for a Schengen visa once the visa has been obtained.

Jason Veitch, md TIC, says: “TIC is aware that the practice of travel agents cancelling travel insurance policies occurs in the market. Cancellations are monitored and we look at identifying any trends.” Jason says if a travel agent advises a traveller to cancel, or knowingly cancels, a travel insurance policy when the client will still be travelling, then the agent will be held liable for the costs incurred by the traveller.

 “There have been instances where the travel agency has been made to pay for the costs of a traveller because they knowingly cancelled the traveller’s policy. One such instance cost a travel agency R250 000.”

If the fraud is uncovered, the worst possible outcome is that the country that is affected may refuse to accept all further bookings by that travel agency or travel management company, adds Jason.  The best course of action for the travel consultant dealing with a client who wishes to cancel their policy is to ensure that all discussions relating to the cancellation of a travel insurance policy are recorded so that there is no misunderstanding at a later stage, says Jason.

“Travel agents should report insurance fraud when they become aware of this happening as it is ethically the right thing to do and, from a business liability perspective, it is the prudent thing to do. No insurer will cover you if you knowingly did something or if you knowingly did not correct something that you knew to be wrong.”

Uriah Jansen, director Oojah Travel Protection, says Oojah also views this kind of fraud in a serious light. “As an insurer, we have given a promise to the embassy that we will provide cover for the insured person. If our insurance policy was used to obtain a visa, and subsequently cancelled by either the agent or the client, it could lead to prosecution and jail.”

For more on this story refer to TNW March 21.