A leading travel industry insurance broker has welcomed an increase in bond provision for Abta members, but warned the availability of Atol bonding won’t improve until details of the CAA’s plans for reform are clearer.
Abta approved two new bond providers in March, substantially increasing bonding capacity by raising the number of providers to five.
Specialist broker Towergate Travel, a trading division of Advisory Insurance Brokers, secured an exclusive agreement with one of the two providers, Axa Insurance UK. The other approved provider is Accredited Insurance Europe.
Towergate managing director Tony Gilpin said: “It’s huge news. There were only three insurers on the Abta-approved list providing unsecured bonding. It took us 12-18 months to negotiate and secure this. Getting Axa on board adds capacity and quality when a lot of Abta members couldn’t get bonding. It will make the market more competitive.”
He explained: “Following Covid we went to 140 insurers who basically said, ‘You’ve had Covid-19, Thomas Cook, Brexit – if there is a sector we don’t want to underwrite it’s travel, due to the uncertainty.”
Gilpin noted bond availability declined rapidly after the CAA dropped bonding requirements for most Atol holders in 2007 when it introduced the Atol Protection Contribution (APC) on bookings.
He said: “There were probably 15 insurers placing bonds in 2007. When the CAA said bonds were only required for bad risks, insurers left the market. A lot also exited after the Icelandic volcanic ash cloud [in 2010].
“Many insurers don’t have the expertise to underwrite [travel] bonds. Insurers run for cover at the words ‘travel industry’.”
Gilpin warned the additional providers won’t mean an immediate easing of the bond market for Atol holders, noting: “Insurers say ‘We’ll hold back until we know the reforms.’ They need to understand what to consider. If the CAA wants bonding to be part of its Atol reform, it needs to give appropriate time.”
Atol protection includes cover for repatriation, and Gilpin explained: “The biggest issue for insurers is they can’t have unlimited liability. You can’t put a number on [the cost of] repatriation – that is the problem. You can have people brought back who have no insurance or who didn’t purchase a package holiday.”
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