Insurers call for retention of TCF

Insurers call for retention of TCF
By admin

The Insurance Council of Australia (ICA) has urged the government not to wind down the Travel Compensation Fund (TCF) after warning it will leave consumers exposed in the event of a failure.

In its submission to the draft Travel Industry Transition Plan, the council stressed that travel insurance products do not provide cover for the insolvency of a travel agent.

“ICA members have asked us that this point be emphasised,” executive director and chief executive Robert Whelan wrote in the submission.

“Additionally, business insurance cover will typically not provide compensation to customers of a travel agency in the event of an insolvency.”

The ICA said action would be available under Australian Consumer Law (ACL) but “given the relatively small value” of individual claims, compared to the legal costs, “action may be beyond the reach and appetite of most consumers”.

“The ICA submits that the TCF provides an important consumer protection and should be maintained,” Whelan said.

The submission failed to address the potential for insurers to draw up insolvency policies, something the Australian Federation of Travel Agents believes is a possibility.

But the parent company of TravelManagers, House of Travel (HoT), said its own research indicated such policies may not materialise.

HoT chairman Barry Mayo said: “Insurance companies and underwriters may be unwilling to provide comprehensive cover as a replacement to the TCF due to the absence of information on travel intermediary’s financials and consequently the difficulty in assessing the size of the risk to be underwritten.”

He added: “It should be noted that this type of insolvency insurance is currently unavailable in NZ where some deregulation of the travel and travel related services market has already occurred.”

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