TO PROTECT consumers from travel agents that go bust after they have sold tour packages, companies must now remind travellers to buy insurance coverage against such an event happening, announced the Singapore Tourism Board (STB) yesterday.
But the consumer watchdog contends that STB's move does not go far enough. It said insurance should be purchased by the tour operators themselves.
Under STB's new licensing condition, travel agents will be required to encourage outbound travellers to buy such insurance when they pay a deposit or make payment worth $500 or more, or buy a package worth $1,000 or more.
Companies will also have to keep a record of whether customers decide to buy insurance.
Mr Yap Chin Siang, STB's assistant chief executive, said: "With the implementation of the new licensing condition, consumers will now be better informed on steps they can take to protect themselves against unforeseen circumstances, including travel agent insolvency."
Mr Devinder Ohri, president of the National Association of Travel Agents Singapore, welcomed the requirement, saying: "This is a good move that allows consumers to better safeguard their interests by purchasing travel insurance."
But the Consumers Association of Singapore (Case) begged to differ, with executive director Seah Seng Choon saying STB's new licensing condition does not "go far enough" in consumer protection.
"There will still be people who are not covered by insurance as they will have to be convinced to take up policies," he said.
Case had recommended that STB require travel agencies to insure their tour packages so that all customers will be covered.
Last month, travel firm Asia-Euro Holidays closed down, affecting hundreds of customers. Another company, Five Stars Tours, left thousands of customers in the lurch when it shut down suddenly last year.
Another agency, Dynasty Travel, said about 90 per cent of its customers will take up insurance before going abroad.
Ms Alicia Seah, the company's director of marketing communications, said: "The remaining 10 per cent either forget or they feel that they do not need insurance because they are travelling short distances."
Reviewing the criteria used in issuing travel agent licences might be more effective in protecting consumers against company insolvency, she said.
"Travel insurance helps consumers to have peace of mind, but it does not address the root problem that some companies might not be financially sound. Setting a higher barrier to entry, such as a higher required set-up capital, or checking if the management is qualified, might help address the problem better," added Ms Seah.
This article was first published on June 13, 2015.
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