The main supplier of consumer financial protection insurance to travel companies has sought to reassure the trade after tour operator association Aito announced it would suspend its promise of 100% protection.
International Passenger Protection (IPP) director Paul Mclean said: “IPP has been providing insurance to the travel industry for the last 21 years and never refused a valid claim due to the insolvency of a tour operator.”
His intervention came after Aito warned it was suspending its protection promise from August 1 while it seeks guarantees that insurers will honour policies.
Aito acted after insurance company AmTrust Europe, formerly IGI Insurance, cancelled the cover of former Aito member Skiing Europe – a school ski-trip specialist – arguing there had been a “material non-disclosure” in the company’s insurance application.
Aito member Noel Josephides, an Abta board member and managing director of tour operator Sunvil, said AmTrust Europe’s decision put a question mark over all consumer protection and supplier failure insurance policies in the travel sector.
IPP declined to comment on the detail of the AmTrust case, but Mclean said: “Section 19 of the Package Travel Regulations [PTRs] makes clear a passenger cannot be penalised by the actions of a tour operator.”
However, Aito said it had received legal advice that “AmTrust Europe was not prevented from [cancelling Skiing Europe’s protection policy] by Regulation 19 of the PTRs”.
The regulation states: “The insurer agrees to indemnify consumers . . . against the loss of money paid over by them.” It also states that an appropriate policy “means one which does not contain a condition which provides that no liability shall arise under the policy, or that liability shall cease . . . in the event of some specified thing being done or omitted to be done”.
Josephides said: “We have accepted a way of offering consumer financial protection that just does not work. This is something the Department for Business has to be aware of – that the Civil Aviation Authority has to be aware of.
“The problem is the insured person is not the tour operator. Should a policy holder give wrong information, the insurer can withdraw, but the customer has no idea. It took us completely by surprise.”