Financial Failure and Travel Insolvency Insurance - EU Directive

The latest version of the EU Package Travel Directive, which brings it up-to-date with developments in the travel market, has applied since 1 July 2018.

It extends the 1990 EU Package Travel Directive beyond traditional package holidays to protect consumers who book other forms of combined travel, such as a flight plus a hotel purchased together online. Under the new directive, such combinations are regarded and protected as a package for insurance purposes.

How does the EU Package Travel Directive affect tour operators?

The directive applies to three different types of travel combinations:

• Pre-arranged holiday and travel packages – pre-arranged packages from a travel agent, tour operator or holiday operator made up of at least two elements, such as flights, transportation, accommodation, car rental, etc.
• Customised holiday and travel packages – a selection of holiday and travel elements for the same trip, bought by the traveller from a single business, whether in an online or offline sale.
• Linked travel arrangements – other linked marketing combinations for travel services. For example, if a traveller, after booking a travel service through a website, receives a targeted or specific invite and makes another booking through the same portal within 24 hours, they are not formally being offered a package. However, under the new regulations, in certain conditions his or her pre-payments will be protected by TRIP.

Travel Regulation Insolvency Protection scheme

Our specially designed Travel Regulation Insolvency Protection scheme is available to all tour operators, travel agents, holiday operators and accommodation/villa providers (subject to status upon application). We have in-house experts that specialise in travel protection insurance, passenger protection insurance and financial failure insurance who can advise the right Travel Regulation Insolvency Protection cover for you. Our policy can be extended to include linked travel arrangements.

We are an ABTA Partner+ and are endorsed by ABTA for our products and services. The policy has been approved by ABTA as acceptable for membership purposes.

For more information on our travel insolvency insurance and financial failure insurance policies, see our financial failure webpage or call our specialist staff on 01932 334 140.

Note that this services is an alternative to travel bonding and therefore will not cover flights.

Wholesale changes to trust accounts

Whilst trust accounts are still an option in complying with the regulations, many changes have been made to ensure they are administered properly and respond to claims in full (including repatriation cover):

• The person or firm arranging and administering the trust account must be independent of the organiser.
• Shortfall insurance arrangements must be purchased in relation to repatriation claims and the continuing of holiday arrangements prior to repatriation.

If you operate a trust account, refer to points 23 and 24 in the new regulations.

About the author

Alison Wild BCom (Hons), FMAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has over 20 years' experience as a residential landlord.