Insurance to back up financial protection for package holidaymakers cost £9.45 million in the first year of the ATOL Protection Contribution (APC).
The insurance is required in case a travel company failure costs in excess of £50 million. The bill must be met by the Air Travel Trust Fund (ATTF), which collects the APC payments and finances repatriation and compensation for passengers in the event of a failure.
The fund also paid out £1.4 million in interest and bank charges on its soaring £46.5 million debt – up from £21 million in the year to the end of March.
The deficit will mean a rise from £1 to £2.50 in the APC on holidays from October 1.
However, ATTF chairman Roger Mountford insisted there should be no return to the former system of bonding for operators.
The cost of insurance and bank charges were revealed in ATTF’s annual report, which also explained the delays in meeting some of the claims by XL Leisure Group customers.
The report said: “XL traded in a variety of ways and the position was made more complex by some agents selling other holiday components with XL flights. Establishing the legal position and responsibility for claims delayed the settlement process.”