Abta today confirmed an increase its limit on payouts on member claims for pipeline cash when an agency fails.
The association will raise the claims cap from just over £110,000 to £140,000. The cap has previously risen annually by around the rate of inflation.
The claims cap for 2013/14 is a minimum of £140,000 – representing a rise of 27% from July 1 the previous year – or three times the annual Abta subscription, whichever is the greater.
The cap is the protection provided by Abta’s scheme of financial protection to members in relation to the credit risk on the failure of another member.
Abta head of financial protection John de Vial said: “We made a significant increase in the claims cap for the benefit of members in July, at no additional cost. We now want to continue this innovation and deliver another set of options for members.”
Members will be able to top up their standard claims cap to one of a number of levels, individually brokered according to their portfolio retail agents and volumes.
Premium costs will start at £4,000 for £280,000 of additional cover and protection can be purchased up to £1.4 million. There will also be options for covering ‘credit agents’.
The new programme is delivered by Abta partner broker Credit & Business Finance Group (CBF) and credit insurer Euler Hermes.
The credit insurance aims to provide members with another tool in managing financial risk and protecting their bottom line, on advantageous terms negotiated by the association.
It is the first time Abta has been able to offer a ‘blended solution’ using a third party credit insurer where claims are managed centrally, making it easier for members to trade safe in the knowledge that their businesses are further protected from unexpected agent failures.
This is achieved through a tri-party relationship between Abta, CBF and Euler Hermes.
CBF managing director Trevor Price, speaking at the Travel Convention in Dubrovnik, said: “We have been working closely with Abta and Euler Hermes over the last year to deliver this offering – with exclusive features for Abta members.”
Key features include:
- Simplified application procedure
- Tour operators dealing with ‘cash agents’ where their turnover is below £5 million will be offered indemnity of 100% above the Abta claims cap and can select from three levels of protection aligned to the Abta financial year
- Where turnover exceeds £5 million: indemnity of 90% is offered and cover can be extended to include credit agents
- Premiums start from £4,000 in respect of £280,000 of additional cover in excess of the claims cap – providing £420,000 of cover in total – loss history dependent
- Levels of protection under this programme are available up to £1.26 million above the claims cap [£1.4 million in total]
- Additional options available for higher value cash and credit agents and buying groups
- The programme synchronises credit and cash agent protection under one centrally managed policy operating in conjunction with the Abta financial year
Price added: “Our role at CBF, as travel industry experts, is to provide solutions tailored for each Abta member and we have over 20 years’ experience in arranging protection for operators.
“Over the years we have helped underwriters to write unique policy wordings to address sales through third party agents including special wordings to protect, for example, pipeline monies up to 18 months out from the date of booking.”
Abta said the failure Gill’s Cruise Centre is a recent example of what appeared, on the face of it, a stable operation that was actually in financial trouble under the surface.
Members, with credit insurance provided by Euler Hermes, benefited from prompt cash replacement for the lost revenue with claims settlements being made within 30 days of final documentation being provided.
Acting as broker, CBF significantly contributed to the speedy resolution of member claims. This was in addition to payments made by Abta to the Abta member cruise principals utilising the association’s single payment system (SPS).
Matthew Wells, head of broker new business at Euler Hermes in the UK said: “We are delighted to be able to continue our support for the travel industry through this offering which provides additional credit insurance cover above the standard Abta claims cap for members.”
CBF and Euler Hermes will provide advice to ensure that members’ insurance requirements are met.
This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.