Mark Pestronk
Mark Pestronk

Q: Travel Weekly in the Aug. 27 issue covered a report issued by the office of Sen. Ed Markey (D-Mass.) on the subject of misleading claims by airlines and major OTAs in the sale of travel insurance. The report claims that consumers are offered "only bare-bones travel insurance plans with little coverage and a long list of exclusions that leave customers stranded." Further, the report claims that consumers are pressured to buy or decline at the point of sale of tickets, and that the policies are hyped as "total coverage" when they actually offer rather limited coverage. I wholeheartedly agree. The problem for our agency is that when we sell a policy and a client's claim is rejected, clients often turn to us. They either want help with appealing their claims (even if they have no hope of winning) or they accuse us of misrepresenting the policy. Since I doubt that either the policies or the sales techniques are going to change, what can we do to protect ourselves?

A: For agencies, there are really five problems here: First, the typical policy's list of coverage exclusions and limitations is very long and often unclear; second, the policies are hard for front-line agents to understand and explain, so they can easily make innocent mistakes; third, agents sometimes do misrepresent the policy, although usually not on purpose; fourth, clients tend to hear what they want to hear in oral descriptions of coverage; fifth, insurers turn down claims that definitely should be covered by their policies.

With all these problems, why would agencies even try to sell travel insurance? Two reasons: First, of course, commissions are quite high, and competition among insurers is tending to drive them higher; second, offering insurance is a very good way to deter claims against your agency in case booking mistakes are made.

So since you want to continue to offer insurance, you can take these steps. First, try to prohibit your staff from offering opinions about whether a given situation would be covered by the policy you offer.

For example, if a client asks whether cancellation due to a pre-existing medical condition would be covered, it is nearly impossible to give a correct answer on the spot because of the complexity of the policy. A policy offered by Allianz takes about 150 words to describe when a medical condition triggers coverage for cancellation; then it takes another 100 words to describe the limitations; and finally, it states that "any problem or event that could have reasonably been foreseen or expected when you purchased your plan" is excluded, unless you have purchased extra coverage.

I realize that telling your staff not to offer opinions is probably not going to work in many cases, so the other step that you should take is to disclaim liability for any descriptions by your staff. You can do that within your regular disclaimer, where you urge clients to purchase travel insurance.

For example, your disclaimer could state: "For your protection, we strongly recommend that you purchase trip cancellation and travel accident insurance. Because these policies are complicated, no representation made by our staff about what is covered constitutes a binding assurance or promise about the insurance." You can find such a provision in the free samples at www.pestronk.com/free.html.

To bind the client, you could require a signature, or you could post the disclaimer on your website as long as the client has to click "I Agree." You could also just include the disclaimer on the itinerary that you email, as long as you can prove that the client received the email and had a chance to read it.

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