Top travel insurer withdraws insolvency cover for SAA tickets
TIC says anyone travelling on SAA from November 28 on can still buy a policy and be covered for all the benefits the policy offers except the travel supplier insolvency benefit
One of SA's top travel insurers, Travel Insurance Consultants (TIC), confirmed on Friday that it had withdrawn the insolvency cover benefit on all SAA tickets.
“This action was triggered by a decision from TIC’s international re-insurer to withdraw cover based on the worsening risk outlook and potential bankruptcy of the airline,” said the company, which is owned by Santam.
TIC said any person travelling on SAA from November 28 onwards could still purchase a policy and be covered for all the benefits the policy offers, except the travel supplier insolvency benefit.
This comes as government officials from the Treasury and the department of public enterprises are meeting behind closed doors to discuss the future of the insolvent airline, which needs a government loan guarantee to continue trading. Without this SAA faces either liquidation or business rescue.
TIC said travel supplier insolvency covered the failure of an airline when it declared bankruptcy. In the event of a failure the policyholder can claim the cost of their ticket to the maximum of the insured benefit limit, in accordance with the policy terms and conditions.
It said that to cover itself, TIC reinsured such cover with its international reinsurance partner that specialised in the assessment of risks in this market.
“The risk associated with SAA’s going-concern status has been an issue for many years; however, in the light of recent events, the risk is now considered to be too significant by reinsurers to continue cover for new ticket sales,” TIC said.
TIC clients who purchased insurance policies, which have the travel supplier insolvency benefit, before November 28 would be covered until they completed their travel journeys, the company said.
This also comes as Flight Centre Travel Group (FCTG) informed its customers and SAA of its decision to stop selling tickets for the airline.
In a statement on its website, FCTG MD for Middle East and Africa Andrew Stark said the company had been advised that a number of other global insurers had taken a similar approach to TIC.
“In light of the above developments and the continuing concerns regarding SAA, Flight Centre Travel Group has made a decision to no longer sell SAA, until such time as we have obtained certainty in the market,” he said.
Stark said FCTG would not stop customers from continuing to use SAA, and would allow them to book with the airline; however, it would “strongly advise” that alternative options are used until certainty regarding the airline’s long-term sustainability is obtained.
On Wednesday night, SAA spokesperson Tlali Tlali said the airline was aware and had received notification to this effect.
“It is an unfortunate state of affairs. We will find ways to engage with the stakeholders and the markets as we seek to manage the situation the best way possible,” he said.
TIC said the decision to withdraw cover was not taken lightly and that its management had been in constant communication with SAA's leadership concerning the challenges the airline faces, and to try to find a solution that avoids TIC withdrawing cover.
The company said it would monitor SAA’s progress as it implements a strategy to improve its situation.
“We sincerely hope the airline obtains the necessary support it needs and returns to profitability. In that case, TIC and its re-insurer may be in a position to review this decision,” it said.