Case Study
Agency: Bell Travel, near Stirling, Scotland.
Number of branches: 15.
Number of staff: 70.
Fee to join GISC: £300.
BELL Travel is concerned about the level of training required by the General Insurance Standards Council as it could make the difference between joining or dropping travel insurance sales.
Managing director Val Foylan said:”Sending all of my 70 staff from Scotland to London for training could easily cost £1,000 each and would not be feasible. It would not be worthwhile continuing to sell insurance.
“I have no objection to the introduction of a standard, but we are not insurance specialists,” she said.
“Training one person per branch would be acceptable, but I believe our staff are already well trained in selling travel insurance.”
Foylan has been keeping a close eye on the implications of the GISC for Bell Travel but said that was only because she was made aware of the new body by Preferential.
“There has been no contact from GISC, not even when I wrote and offered them my help and advice from a travel perspective in my role as president of the Scottish Passenger Agents’ Association,” she added. “That does not bode well for the future.”
Foylan does not object to the demand for professional indemnity insurance, although she questions the need for the £1m proposed by GISC. Bell Travel currently has £2,000 PI cover.
She said the separate bank account for clients’ insurance money is not an issue, but she objects to the idea of paying a fee to duplicate the work Bell Travel pays ABTA to do.
THE General Insurance Standards Council is showing signs of relenting over its original demand that all travel agents become members after being inundated with submissions from the insurance industry on the way it should operate.
The new self-regulatory body, which is aimed at controlling the way insurance is sold, was due to start signing its first members at the end of last month, but is now targeting June for travel agent membership.
It admitted its timetable was too optimistic and is suggesting there might also be a role for ABTA to shoulder some of the work as regulator for its travel agent members on behalf of the GISC.
Last October, the council’s chief executive Chris Woodburn said his aim was to sign up all travel agents to avoid fragmentation in the way insurance is sold.
“We now have a better understanding of the commercial situation of the travel trade so we need to go back to the drawing board to try to give businesses greater freedoms without diluting our commitment to customers,” said a spokeswoman.
“The numbers of agents involved might mean there is a role for ABTA as an umbrella organisation,” she added. “It would help with registration.”
This stance starts to come in line with ABTA’s own concept of its role in respect of the GISC.
In a submission at the end of December, ABTA said it should regulate its members on behalf of the GISC.
Head of legal Riccardo Nardi said this would remove the need for agents to become members and pay the membership fee, which starts at £300 and rises to £100,000. “We will agree ways to ensure there is no fragmentation in the selling of travel insurance and we will change our code to meet the GISC’s proposals,” said Nardi.
ABTA’s code of conduct has general reference to travel insurance sales in respect of accounting and the issue of documents to clients. Nardi said the GISC would also want reference to the way insurance is sold and the quality of information given.
He added: “It would also want training to be beefed up and we are well placed for that through the Travel Training Company and our links with the Association of Travel Insurance Intermediaries.
“We might have to increase our fees, but we are talking of tens of pounds, not hundreds.”
However, ABTA is firmly opposed to the GISC proposal that members must have a separate client account to hold insurance premium.
This means they would not be able to use that money to run their business until the date that it has to be paid to the intermediary. Sub-agents and intermediaries would also need professional indemnity insurance.
“A client’s money is already protected by ABTA, so a separate account will only be protecting the insurer,” said Nardi. “And large insurers which sell direct would not be required to have PI. That is biased towards insurers.”
Ketteridge general manager (sales) Doug Weston said ABTA’s submission was “excellent”, but Aon Suretravel managing director director James Beagrie warned that agents should not think the GISC will not affect them. “It is still a major issue,” he said.
Some intermediaries want to take responsibility for their agents, rather than giving that role to ABTA, to ensure self-regulation works.
“The last thing we need is for government to step in and start to regulate the industry,” said Euclidian Risk Management director Steve King.
ABC Travel Extras managing director Stephen Lawrence said the GISC proposals were reasonable. “If an agent is not liquid, they should not be trading,” he said.