AITO takes urgent action to deal with protection fiasco
AITO is making urgent changes to its charter and website following its decision yesterday to temporarily suspend its 100% financial guarantee.
Members with insurance cover are having to act fast to make customers aware of the changes, by over-stickering their brochures, changing their websites, and briefing their staff.
AITO has been forced to temporarily suspend its 100% financial guarantee from August 1 following the discovery of an “enormous loophole†in the Package Travel Regulations.
But it admitted that many in the industry are failing to understand the issue, let alone customers.
The loophole, in relation to Tour Operator Failure insurance, came to light following a police investigation into Devon-based schools ski operator Skiing Europe, which was an AITO member for nine months until it resigned earlier this year.
An inquiry began in March after the company cancelled several school ski holidays or forced schools to cancel at the last minute, leaving thousands out of pocket.
AITO had been taking legal advice following the investigation and had hoped to be able to fight to ensure all schools were refunded the money they had lost.
But in a statement yesterday it announced that Amtrust Europe, which AITO had understood had been insuring Skiing Europe for several years, has cancelled the policy it issued to Chris Reynard, a sole trader who operated as Skiing Europe.
“This move has belatedly left many thousands of school children without the financial protection their schools and AITO believed they had, in the event that Chris Reynard is unable to meet their claims due to his insolvency,†AITO explained.
Because of the loophole, AmTrust Europe is entitled to cancel Skiing Europe’s financial protection policy as a result of material non-disclosure by Reynard when applying for insurance.
“We believe that this is a very serious shortcoming in terms of the insolvency protection provided to consumers by the Package Travel Regulations,” said AITO.
Currently 23 of its 150 members hold such policies and AITO believes many more non-member operators are also in the same boat.
AITO chairman Derek Moore said: “This case throws into question the viability of a great many insurance policies which are currently in use in the travel industry.
“AITO thus calls on Government and the industry in general to look very closely at policy wordings so that such an unfortunate situation, denying consumers the cover for which they have paid, cannot occur in the future.â€
* Does this loophole revelation impact your business? Are you relying on this type of insurance? Do you understand the implications?
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by Bev Fearis
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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