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ITIJITIJ Page 18 Page 20 Page 22 Page 24 International Travel Insurance Journal ISSUE 54 • JULY 2005 ESSENTIAL READING FOR TRAVEL INSURANCE INDUSTRY PROFESSIONALS TGIC buys Big ‘I’ rejects ‘optional’ federal charter Whitley travel book Thanks, but no thanks, says the inevitable, and that it would Independent Insurance Agents & be detrimental to consumers John Sanders catches up with the latest twists and Brokers of America (the Big ‘I’) to and producers, according to turns regarding Whiteley, after they were forced mounting proposals favouring an Symington. into receivership optional federal charter (OFC) to He adds that the latest OFC regulate and reform the insurance proposal would force the Travel & General Insurance Company plc (TGIC) has industry. Report by Milan Korcok state system to backstop taken over the travel insurance book of Whiteley federally chartered insurers. Insurance Consultants, one of Britain’s biggest travel Responding to recent letters and He said: “This is an insurance brokers, after the Financial Services proposals supporting an OFC from unprecedented intrusion on Authority (FSA) forced Whiteley into receivership at several financial services companies state solvency regulation and the end of April (see ITIJ 53, June 2005). and state banking associations to the potentially a huge detriment TGIC, part of the Travel & General Group, is the federal Senate Banking Committee, to consumers. There is leading provider of bonds and financial failure cover Charles Symington, Jr, senior vice nothing optional about that.” to tour operators and travel agents in the UK. president of the Big ‘I’, said that There is no question reform However, in February 2003 it purchased the business although reform of the industry is is needed, says the Big ‘I’, but of another failed travel insurer, Travel Protection needed, it is best achieved within the agents, brokers and the Group (TPG), and in April 2004 began underwriting existing state regulatory system. consumers they work with travel insurance itself. In that respect he referred to the are better served by “This is why the Whiteley’s purchase was very much proposed State Modernization and reforming the existing system an opportunity for us to develop this fledgling side of Regulatory Transparency (SMART) Act, and by supporting the our business,” TGIC spokesperson Samantha which has been crafted by state level SMART Act legislation as it Callaghan told ITIJ. In the longer term, TGIC expects insurance regulatory associations and is moves ahead to federal to benefit when – as many believe – FSA regulations expected to be introduced in Congress legislative action. are eventually applied to travel agents selling travel this summer. The Act is expected to be “We support the SMART Act insurance. hotly debated by legislators, many of for several reasons, including TGIC has already contacted everyone who bought a whom have been actively stumping for the fact that it would foster policy through Whiteley after it was found to be in more federal regulation over the consistency among the breach of FSA regulations, and is now contacting insurance industry – which traditionally individual states without clients with valid travel policies purchased last year as has been regulated at state level. creating a new, cumbersome they come up for renewal. TGIC is offering to renew Symington said that although there federal bureaucracy or unduly Whiteley policies through its tagdirect subsidiary and may be an impression that many burdening agents and brokers will underwrite the policies itself. insurance companies support federal nationwide with onerous or The FSA took action against Halifax-based Whiteley regulations: “It has been our dual regulations,” said Big ‘I’ after discovering that the company had been acting experience that the vast majority of chief executive officer Robert without permission as an insurer and that some of the insurance companies, and an overwhelming number Although the proponents of an optional federal A Rusbuldt. 10,000 or so travel policies it had issued were not of our agents and brokers, oppose an additional charter say it would not supplant state regulation, the “When it comes to insurance regulation, consumers underwritten. Whitely also traded as Kingfisher Travel federal charter for the insurance marketplace.” Big ‘I’ believes such an occurrence would be continued on p.4 Insurance and Kingfisher Insurance Services. the cost of your airline ticket refunded (up to US flight insurance contentious $3,000) if you meet the covered criteria. Northwest offers its international passengers a In a hotly debated new move, some US airlines airlines have been accused of making even more more expensive product, called Comprehensive have begun to offer trip cancellation insurance to money out of travellers. Trip Protector, which costs 5.5 per cent of the cost their passengers. Report by Sarah Lee In a report in the Wall Street Journal, fare watcher of the airfare and includes limited medical Terry Trippler commented: “It’s sort of double- coverage and emergency medical transport. One click whilst purchasing an airline ticket from dipping. You set the rules, and then turn around and With either policy, however, covered ‘reasons for Northwest Airlines, Continental Airlines or America charge people to escape them.” cancelling’ have been accused of being ‘fairly West Airlines’ website enables you to buy travel The airlines, however, are pleased with the results of limited’. Not all medical emergencies are covered; insurance along with your air fare. their new enterprise, and insist they are simply neither are pre-existing conditions. Meanwhile, the For four per cent of the total cost of your non- offering passengers a choice. “A significant number of items that are covered have come in for criticism refundable ticket, you are covered by your airline our customers find it to be valuable,” said Julie King, for being either covered elsewhere or highly under the Ticket Protector policy from Access spokeswoman for Continental. restricted. For example, Ticket Protector covers America. But, the insurance has been knocked for So, although this new insurance is very limited when covering only very limited circumstances, and the compared to traditional travel insurance, you do get continued on p.4 2 NEWS Stamp duty ups travel insurance costs An increase in stamp duty Editorial premiums on ITIJITIJ general insurance in International Travel Insurance Journal the state of New comment South Wales (NSW), Australia, is WHAT’S IN prompting travel It is alarming that travellers keeping within insurers to take the a limited budget will drop travel insurance opportunity to first from their check-list as they don’t see THIS ISSUE? inform travel agents it as strictly necessary. For those who do that they should not bother to insure themselves, many be dissuaded from cunning travellers will simply put in a false encouraging claim on their return to level out the initial REGULARS customers to take expense of the policy or indeed profit out travel insurance. from the exercise. This is a mind-set that News 1 To take affect in the has grown amongst certain buyers of 2005/2006 financial travel insurance. There is an army of Editorial comment 2 year, the increase in customers out there who believe that they Grapevine 5 stamp duty from five to nine per cent will who should carry the cost. That said, travel agents should get a return on their investment for Insurance matters 7 predominantly apply to all stamp duties on domestic need to be mindful that the need for travellers to buying the policy and this translates to lying Air ambulance news 10 travel insurance and cancellation charges on insure themselves is greater than ever, and about claims. Although this is a crime, it is international travel insurance. supersedes the discomfort of these extra charges,” perceived as a lesser crime, a ‘household Health matters 12 Mondial Assistance estimates that on an average said Mondial Assistance Australia managing director, crime’ that doesn’t have a victim. Travel matters 14 international policy of AUS$264 the new stamp duty Peter Edwards. “While the reality is that the industry However, in the UK alone, insurers have Company brief 16 premiums will result in an increase of approximately will ultimately pass this increase onto the purchaser, lost over a billion pounds every year from News analysis: A bloody pest 18 AUS$5, while an average domestic policy of AUS$127 travel agents need to be aware that any increase for these ‘little white lies’ and that’s theft, pure will incur an additional charge of AUS$4. individual travellers will be negligible and should not and simple. World markets: Belgium 22 “It is disappointing the NSW Government has affect their decision to take travel insurance for Travel insurance can be a hard industry, Service directory 26 chosen to introduce this extra tax without regulating domestic and international travel.” and many of the problems are related to Hot spots 30 the customer’s attitude toward the product. It is this attitude or perception Smile corner 30 that must be addressed and customers Dick’s hotline: Drug law alert 30 should be educated about what they are Diary dates 31 Alabama targets Aruba over missing student spending their money on and why it is On the move 31 important. The message is clear – travel The case of the 18-year-old Alabama student gone Another pressure group from Oregon is also calling insurance needs to assert a stronger Contributors 31 missing in Aruba is

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