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?
{ 6 comments… read them below or add one }
At Travel Guard, we’re not your typical travel insurance company. We go out of our way to provide astonishing customer service, including post-trip claims processing.
Here’s our approach to claims handling. I think you’ll agree our service standards exceed anyone else in the industry:
• 98% of all claims are filed with one phone call. We don’t mail burdensome, blank claims forms.
• All claims are paid within 24 hours of final documentation.
• Our “Fairness Principle” is applied to all denied claims. As part of this principle, all denied claims are sent to an artibrator for review. If the arbitrator determines that the claim was not justified, a phone call is made to the claimant to explain the reason for denial. Travel Guard does not send impersonal claims denial letters.
We’re extremely proud of the claims service we provide and we routinely receive compliment letters on our service. Here’s an e-mail we just rec’d this week (Sept. 22, 2008):
“Please forward this to John M. Noel, President
I want to take this opportunity to praise your company for outstanding customer service. My friend and I had planned a vacation to France for October, however in July she broke her foot in three places and is still unable to travel. Our first step was to cancel our trip. The second step was to call AIG to determine what we needed to do in order to file a claim for our non-refundable deposits. I spoke to a lovely woman named Erica (sp?) who not only explained the process but also started it and assigned us both claim numbers. She was so pleasant and helpful.
Once we got all of our required documentation we mailed our claim on September 8th knowing that it would take at least a month to process. We were okay with that. What a wonderful surprise when we received our checks in the mail on September 20th (a mere 12 days from the mailing date), accompanied by the very nice personal letter from John Noel. In today’s world, good customer service, if any, is a rarity. Your employees need to be commended for not good customer service but outstanding customer service! We recommend AIG to everyone we know who is making travel plans.
May the current financial woes be few and you careers be long and fruitful!
Sincerely,
Jane”
If anyone is concerned about Travel Guard’s ability to pay claims, they needn’t be. Travel Guard has been working with National Union Fire Insurance Company of Pittsburgh since 2002 (before our acquisition by AIG). NUFIC is a very strong insurance company with surplus of $12.1 billion. The surplus of our next closest competitor is only $1.1 billion. Surplus is cash that an insurance company sets aside that is over and above the amount used to pay claims. It is extra security for policyholders. Travel Guard has four times the surplus of ALL the other major travel insurance providers combined!
AND – this surplus cannot be touched. “The bottom line is there can be no raid on the reserve funds that are in those insurance companies without the approval of a state regulator and I can promise you no state regulator is going to allow those reserves to be drawn down and put their insureds in jeopardy,” This is what Sandy Praeger, the president of the National Association of Insurance Commissioners, said in a conference call with the media on 9/17/08. http://www.marketwatch.com/news/story/aig-policyholder-should-you-stay/story.aspx?guid=%7B500B803E%2D11D1%2D4584%2D8D66%2D85E26BC9EA66%7D
We look forward to continuing to provide astonishing customer service to the millions of travelers who insure their trips through Travel Guard for many, many years to come.
Nice PR release from the company.
Why did they not address the substance of the issues pointed out, which included, lets see, ambiguous terms, domestic partner language which does not comport with married couples language, and pre-existing conditions language.
Because they cannot address those issues with corporate fluff.
The BIGGEST risk you face is the travel provider going bankrupt or otherwise ceasing operations., Yet, the company wants your money immediately, sometimes having the premium for a year before travel. They get the use of that money. I understand adverse selection, but how about a premium payment plan like they have for other risks. They are not even ON the risk until the payment becomes non-refundable – which in most cases is 60 days out.
Before ANYONE buys a travel insurance product [first making sure it is real insurance and not a ponzi scheme] you need to get an actual specimen policy and read the exclusions. And make sure you understand them.
The first comment is just pure fluff by AIG PR people. That surplus is not just for travel insurance but for homeowners, auto insurance and the like – you know real insurance. Travel insurance is just a pimple of that business. Don’t be fooled people. This is a house of cards they are just trying to prop up. Trying to pay you off with 50% commissions. Do you want to be stuck with the bill when AIG fades away? Sell some other company’s product, these guys are sooooo desperate.
Excuse me? AIG Travel Guard is giving travel agents 50% commission? As in half of my policy cost? What is that, a tax rebate for the people whose money bailed them out?
I bought travel guard insurance for my cruise out of cape canaveral november 17-21 2008 . we stopped on an island coco cay in the bahamas where their we had a bq lunch and i broke my tooth in halve biting into a bq rib sliver of bone. this was covered in my insurance but there was no dentist on board so i had to wait till we reached port I called my dentist from the ships phone as soon as we docked and had him call in pain medication as the pain was unbearable. I filed a claim after all the dental work had been completed all the requrements had been meet but my claim was denied because i did not get the dental work done aboard ship . there was no dentist on board to fix my busted tooth what the hell can a person do. the insurance company travel guard is a big big big big disapointment . thanks busted tooth caper in the carribean. moral of this story is watch what you eat and read the fine print .
It is out of my normal capacity to respond to irrational comments made by people on sites like this. However, I am appalled at this behavior. I am a claims representative for travelguard. Yes, I am one of those people on the front lines when you bitter, bitter people call in, flustered, angered and agitated over the AIG issues. I find the behavior of some people to be utterly disgusting at times. I wonder what causes some of you to become angered at the insurance company for not reading through policy information that YOU purchased. When is the last time you bought something and didnt understand a single thing about, especially if it was supposed to do or provide something for you!!!!!!!!!!!!! It is YOUR responsibility as a consumer to know what you are purchasing. If you do not agree with the terms or do not believe that it is providing the type of coverage that you seek, thent dont buy it! As for the comments of the “corporate fluff” for the first thoughts here, I happen to know that Peg is NOT a PR person and has been an honest agent for Travelguard for some time. The compliment she posted is a real compliment provided by a customer! We receive many daily. My advice to all of you, read your policies and quit throwing temper tantrums because of your own ignorance.