Lessons from the Monarch collapse

6th November 2017

It’s been just over a month since Monarch airlines ceased trading. It left around 110,000 people stranded overseas and about 300,000 holidays were cancelled. Holiday makers suffered and this was mainly because not all travel insurance providers offered cover for such incidences. According to independent financial information business Defaqto, over two-fifths of travel insurance policies offer no protection for airline failure, and this is what left many a traveller in trouble.  

Following on from this debacle, here’s some advice you can impart to your customers so that should anything like this happen again, they are at least covered for the costs partially or in full:

  1. Tell them to make sure their holiday bookings are protected by schemes or industry bodies: The Air Travel Organiser’s License (ATOL) scheme is run by the UK Civil Aviation Authority on behalf of the government. More than 18,000 holidaymakers were looked after by the ATOL protection scheme following the collapse of Monarch.
  2. Ideally book a holiday using a credit card: Any purchases valued over £100 benefit from the protection afforded by Section 75 of the Consumer Credit Act. “If you paid for your flight with a credit card, you will be able to get a refund from the credit card company and should contact them directly for this. If you bought your flight with a debit card, you may be able to claim under your travel insurance policy if you have this cover,” says Brian Brown, head of insight at Defaqto. If your client intends to pay using a debit card in the future, tell them to check the terms and conditions of their provider’s Chargeback scheme. Terms and conditions will differ from provider to provider.
  3. Ensure that your clients act quickly to obtain a refund: With the Chargeback scheme, for example, there’s usually a limit as to when clients can claim – typically this is 120 days following the time your client became aware of the problem.
  4. Compare holiday cover: Get clients to study policies carefully or offer to peruse the documents on their behalf. Consider using Defaqto’s Star Ratings as a guide. The company’s experts analyse features and benefits of single and annual insurance policies and then each policy is then scored and given a rating.
  5. Check to see if the travel cover has Standard Airline Failure Insurance (SAFI): If the airline goes out of business before your client’s travel, SAFI may cover any irrecoverable flight costs if they have to cancel their trip. According to Stephanie Corbett, head of travel at comparethemarket.com, if the airline goes out of business whilst your clients are away, the insurance could cover the cost of a replacement flight back to the UK (subject to insurance limit).

Whether any lessons will be learned following this travel disaster will be anyone’s guess. But brokers can play a key role in ensuring that clients get the best advice when travelling out the country.

So, after you’ve asked clients about the usual home contents, car, life and disability insurance then some gentle queries about where they are going on their summer or winter holiday and an offer to go over their holiday cover won’t go amiss.

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