Fred Olsen Cruise Lines could start asking agents for a bond or other financial security if it cannot secure credit insurance to cover the risk of doing business with them.
The operator says it wants to take a collaborative approach with the trade and that it is in talks with agent partners about how it can manage financial risk.
The move mirrors similar changes leading cruise operator Complete Cruise Solution has made to the way it works with agents. CCS, however, does not have credit insurance for agents.
Fred Olsen said it was looking to secure credit insurance to protect itself against agency failure but that this was “becoming increasingly difficult”.
The current economic climate means many insurance limits are being reduced or removed, it said.
Nathan Philpot, sales and marketing director for Fred Olsen, said it has credit insurance secured for 80% of agents but the remainder still posed a substantial potential risk.
“This has got to be a dialogue, not a one-size-fits-all solution. We started conversations before Christmas, it would be great if we could have something in place by the end of January,” he said.
Agents which Fred Olsen insurer, Euler Hermes, refuses to cover will be given a range of options including putting up a bond or bank guarantee.
Another option could be increasing the frequency of payments or, as CCS is trying to bring in, getting agents’ customers to pay the line direct.
Philpot said head office solutions could also be sought with consortia. Although Fred Olsen is an Abta member association rules provide limited cover for agency pipeline monies.
Since 2007 operator pay outs have been restricted to three times annual subscriptions in any given year.
Philpot said: “There probably needs to be dialogue with Abta about whether this works for everyone because clearly it’s not adequate if a significant Abta cruise retailer goes bust.”
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