The travel industry became involved in the Wall Street meltdown last week when AIG faced financial catastrophe and ended up on the government bailout list. But the crisis is far from over — especially if you’re a travel agent.
Travel Guard, a division of AIG, is covered by state regulations and guarantees funds which should keep it solvent and keep consumers’ payouts safe, as we noted last week.
Travel insurance was a difficult subject for travel agents, even before the meltdown. Ask any agent in the business and you will get horror stories.
“It’s like stepping through a minefield,” one co-worker told me.
Because travel insurance policies are often ambiguous at best, should a client file a claim, you can bet on what side of the ambiguity the company’s decision is likely to fall. And it isn’t on the side of the consumer.
The usual culprit is “pre-existing conditions,” but there are other issues. Most insurance covers domestic partners, but read the fine print, in the most comprehensive Travel Guard platinum insurance a “domestic partner” must not only share financial assets with you, they must have done so and lived with you for at least 6 months. (A standard not applied to newlywed heterosexual couples.)
Then there’s “financial default” of an airline or tour operator, where you are not protected unless you buy insurance within 21 days of your initial deposit.
Insurers have plenty of reasons to try to deny your claims, and they will often try to do so.
If Travel Guard’s parent is in financial trouble, who’s to say that their agents won’t be more vigilant in looking for reasons that your policy isn’t valid? Much more likely, if clients have a claim denied, who’s to say they won’t blame their agency for selling that insurance company in the first place. Especially if we knew that company’s parent had financial issues.
Back before ATA ceased operations, there were rumors they would drop their Hawaii service. No one was saying they would go out of business completely, but many agents I know were careful to pass on what we had heard, stressing it was just rumor, but not wanting the legal liability of non-disclosure. (As a result, our office had almost no one booked on the carrier when they shut down.)
This isn’t to say that Travel Guard will be any more difficult to deal with than any other company in future, and we really don’t know what will happen pending the AIG situation. Everything is likely to be business as usual. And I have nothing personal against the company.
But in a business where travel agents have to cover ourselves constantly from clients holding us liable for problems, why knowingly add one more potential issue?
