The double guarantee of the Package Travel Act will mean a minimal additional cost for the sector

InterMundial, the leader in travel insurance in Spain, believes that the implementation of the Package Travel Act will mean minimal additional costs for travel agencies. Furthermore, the company sends a reassuring message to the sector, asserting that the implementation of the new Directive will greatly benefit agency clients, whose rights as consumers will be strengthened.

In this regard, InterMundial asserts that the new regulations will strengthen traveler protection by preserving specific guarantees, such as insolvency coverage and liability for breach of contract for both wholesale and retail agencies.

Double protection for the consumer

For InterMundial, the joint guarantee established by the Directive will lead to double protection for travelers who will benefit from an additional guarantee on their bookings. In this regard, it mentions two scenarios in which consumers will be better protected. On one hand, if a retail agency goes bankrupt before having transferred the amounts paid in advance by the client for a trip reservation, and the retailer lacks insolvency protection, the client would previously have lost their money. Under the new situation, the insurance would reimburse them. Another example where client guarantees would be increased is in the case of the bankruptcy of a vertical group (wholesaler and retailer simultaneously): since there are now two policies, double the capital per package trip would be covered, therefore, there are now greater guarantees that clients will recover the full amounts they claim.

Francisco Javier del Nogal, Deputy General Manager of the InterMundial Group, also points out that it must be taken into account that the new Package Travel Act “will require a greater effort from insurers, as they will have to face higher risks due to the obligation to increase their guarantees for small and medium-sized retail agencies from 60,000 to at least 100,000 euros”.

Regarding the European Commission's estimates, which indicate a cost for the organizer of between €7.50 and €9.50 per trip to comply with the Directive's requirements, InterMundial considers it important to clarify that this cost is derived exclusively from administrative expenses related to the implementation of the directive and, in no case, from meeting the double guarantee requirement.

Analysis of actual additional insurance costs

InterMundial, which currently works with over 5,000 partner travel agencies in Spain, has sought to shed light on the uncertainty surrounding the new law by clarifying that the increase in costs associated with travel insurance will be practically minimal for agencies.

The company explains that if we take the case of Catalonia as an example, where it is already mandatory to cover 5% of turnover for insolvency protection, the additional annual cost for the surety bond for most agencies, compared to the previous regulations, is approximately €200. This means that for agencies managing approximately 2,000 package holidays or linked travel services with an average cost of €1,000, the additional cost is just €0.10 per trip. For agencies that only reach 1,000 package holidays, the additional cost would be only 20 cents per trip. And for some wholesale and wholesale-retail agencies, the cost will be even lower than what they are currently paying.

About InterMundial

InterMundial is the leading insurance broker specializing in sports and tourism in Spain. It has offices in Spain's main tourist cities and 7 commercial branches abroad (United Kingdom, France, Italy, Portugal, Mexico, Brazil, and Poland).