AITO discovers Package Travel Regulations insurance loophole

AITO discovers Package Travel Regulations insurance loophole

AITO is to temporarily suspend its 100% financial guarantee after discovering an ‘enormous loophole’ in Package Travel Regulations. The association is to suspend the guarantee from 1 August and has therefore forced its members with insurance cover to aware their customers of the changes. In a statement released yesterday, AITO said it had found the policy ‘not fit for purpose’ as the insurer has the right to cancel a policy with travel companies after bookings have been made with consumers. “We believe that this is a very serious shortcoming in terms of the insolvency protection provided to consumers by the Package Travel Regulations,” AITO said in the statement. It said 23 of its members hold these policies and the integrity of those members had not changed. “In most cases, these policies provide similar cover to that provided by a bond, which is tried and tested. AITO will now ask the insurance companies concerned to confirm in writing that they will not cancel these policies and will honour them in the event of insolvency,” the statement said. The loophole has left thousands of school children with no refund after former AITO member Skiing Europe was forced to cancel several school trips during financial problems and had its failure policy taken away by Amtrust Europe. The latter announcement came to light when AITO sought legal advice during a police investigation into Skiing Europe and found that the insurance company was legally allowed to pulls its financial protection policy from Chris Reynard, who solely operated Skiing Europe. Due to his insolvency he is unable to pay compensation to customers but AITO said it would continue to find a solution. Now AITO has asked the government and travel industry to review their insurance policies so that other consumers are not affected. “This case throws into question the viability of a great many insurance policies which are currently in use in the travel industry,” said Derek Moore, chairman of AITO. “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.”

Gary Marshall
Written by:
Gary Marshall
Posted On:
Posted In: