Have travel agents set up escrow account

Have travel agents set up escrow account
Mr Derek Teo, president of General Insurance Association (GIA).
PHOTO: The Straits Times

Travel insurance is not a panacea for safeguarding consumers' monies used as deposits for travel and tours ("Call to regulate travel agencies"; Tuesday).

First, travel insurance is primarily meant to cover financial losses incurred by policyholders as a direct result of injury from accident or sickness during overseas travel.

Additional features of travel insurance can include, for instance, lost luggage, delayed flights or insolvency of travel agents from whom policyholders made purchases.

Therefore, it must be noted that not all travel insurance policies cover travel agency insolvency.

The General Insurance Association of Singapore (GIA) advises consumers to specifically ask for "travel agency insolvency cover" to be included in their terms and conditions of the travel insurance if they wish for such coverage.

Second, and perhaps more importantly, GIA believes more can be done to proactively protect consumers' deposits.

Aside from more stringent regulations on the management of travel agencies, the authorities could make it mandatory for travel agencies to take up insurance policies that protect consumers in the event of agency insolvency.

The authorities can also look into setting up an escrow account for customers' monies, kept separate from the operating account, for travel agencies.

Derek Teo

Executive Director, General Insurance Association of Singapore

This article was first published on July 31, 2015.
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