Selling travel and selling travel insurance go hand in hand.
But in recent years, travel agents have become hesitant when it comes to offering travel insurance, because they believe that legal restraints have put them in a peculiar and difficult position.
With a better understanding of the legal pitfalls, travel agents can confidently go about offering travel insurance.
“We must start with the fact that travel agents have a legal obligation to recommend travel insurance to clients. Nor does the legal obligation stop at handing over the travel insurance “product disclosure statement” (the new name for an insurance policy application) to clients, it goes further” explains specialist tourism lawyer Anthony Cordato.
Under the Department of Foreign Affairs and Trade (DFAT) Charter for Safe Travel, for which AFTA was first signatory on 11 June 2003, agents are committed to “encourage travellers to take out adequate travel insurance”. The process isn’t always easy.
To ‘encourage’ travel insurance, the travel agent must provide advice – what cover is recommended, what are the requirements, what are the exclusions, to fit the client’s circumstances and the travel destinations?
To give comprehensive advice on travel insurance, ASIC requires the travel agent to hold an Australian Financial Services (AFS) licence or be an authorised representative of a licence holder. Many agencies have one person who has trained and is an authorised representative. But most travel consultants are not authorised representatives. How does the travel consultant ‘encourage travellers to take out travel insurance’?
Cordato, author of the book “Australian Travel & Tourism Law”, says that the Insurance Ombudsman Service (IOS) has recently solved this dilemma. In May this year, it published a “Start Holiday” brochure. The brochure is a guide to travel insurance prepared with the assistance of Australia’s four major travel insurance underwriters. It can be ordered from the IOS
Note: this was the second in a series of five interviews in which specialist tourism lawyer Anthony Cordato discusses issues of vital importance to travel agents.
Published with the kind permission of e-travel blackboard, where the article was first published in August 2007, and with the kind permission of Peter Needham.