In common with other corporate insurances, we have access to the main bonding markets and described below are the various options available for travel companies.
Under the Package Travel Regulations (‘PTR’) there is a legal requirement for travel companies to protect customers’ deposits (all monies paid to you) in the event of your insolvency.
If your firm does not fall under PTR you may nevertheless consider protecting your customers’ deposits for commercial reasons anyway. In which case the Passenger Protection Insurance (see below) would usually be the most appropriate.
You can obtain a bond from an insurance company (via MPI Brokers) which is usually made in favour of the Association of British Travel Agents (ABTA) or other trade bodies who accept bonds. The premium will be set based on the strength of your company and the balance sheet, and will be rated on the value of the bond. This is usually unsecured but may require a first charge or debenture over your company.
You may approach your bank to obtain a bond which again would be in favour of a trade body. This will be secured and in normal circumstances would be at a lower cost than the insurance route. The disadvantage of this option is that it ties up assets or if there are no free assets available, it is unlikely a guarantee will be provided.
You may set up a Trust Account with your bank and appoint trustees (usually a lawyer and an accountant) to run the account. All receipts from customers must be placed in that account and no monies may be released, including your commission until the customer has returned from their holiday, which could be several months.
You may enter into a ‘Master Policy’ arrangement with an insurer (via MPI Brokers) where your customer will have an interest under the policy who, in the event of your insolvency, would have a right of claim under the insurance. They would usually have to exhaust other means first such as recovery from credit card if applicable.
All the above routes satisfy the Package Travel Regulation requirement.
If you wish to discuss any of these options further please do not hesitate to call us on 01428 664265 and please obtain a proposal form below in order for us to obtain terms on your behalf for any the insurance arrangements described above.