Itinerary for joining a package tour will be limited and so is the choice of travel insurance. In a survey on 18 travel agents, the Consumer Council has found the widespread practice of selling travel insurance to consumers enrolling for package tours. In particular, 6 used bundle sale tactics to sell package tours together with travel insurance. Among them 1 travel agent operating tours to Japan demanded customers to compulsory purchase of specified travel insurance while the other 3 required proof of purchase of valid year-round travel insurance cover in order to claim exemption. Another travel agent stipulated that unless consumers could produce proof of insurance cover, they must first purchase the designated travel insurance. The same requirement was applicable to enrolment online, 1 had pre-set travel insurance as a non-deletable and non-refundable payment item. A similar survey conducted by the Council 7 years ago had found similar situation as it is now, indicating that the industry has not made any significant improvement over the years.
The Council is of the view that the use of such bundle sale tactics not only deprives consumers of their right to choose but the insurance cover also may not best suit their needs. While a wide range of travel insurance products is available for the choice of consumers on the market, travel agents offer only one single product with some insurance premiums as high as 30% of the tour price, which is clearly disproportional. The Travel Industry Council of Hong Kong is urged to devise clear guidelines on the practice of travel agents in the sale of travel insurance and the authorities should also consider regulatory oversight to safeguard the consumers’ right of choice.
Between June and October this year, staff of the Council, in 2 separate visits, made a total of 87 enquiries at the 18 travel agents and scrutinised 34 online information on package tours. The survey focused on “Japan 5-day Tour”, “Beijing 5-day Tour”, and “Chaoshan 3-day Tour”, and where there were no identical tours, the nearest alternative routes would be used in order to find out the various sale practices employed by the travel agents in selling travel insurance.
The survey found all of the travel agents, without exception, were engaged in various degrees in the sale of travel insurance. In the majority of cases, the offer was optional to the consumers to decide on whether or not to make the purchase. However, 6 travel agents employed bundle sale tactics to drive travel insurance sales; in other words, no enrolment of tours would be accepted if no travel insurance was purchased unless some other pre-conditions could be met.
The survey showed that in one travel agent specializing in holiday tours to Japan, all customers enrolling for Japan tours must also at the same time purchase specified travel insurance. A 5-day tour to Osaka at $10,399, for instance, must also purchase a travel insurance of a premium of $305 arranged by the travel agent.
4 other travel agents would waive the travel insurance requirement if consumers could produce proof of purchase of year-round travel insurance or comprehensive travel insurance; otherwise, they must first pay the insurance premium, and refund of the insurance premium could only be done if they could prove to the travel agents the purchase of their own insurance within a specified time limit.
The remainder 1 travel agent, despite not requiring the purchase of specified travel insurance, the charge of insurance premium was pre-set as a payment item that could not be deleted if consumers opted to enrol online. 3 other travel agents had the same online charge but according to the staff of 2 travel agents, consumers could get back their premiums paid provided that they could produce proof of a year-round insurance policy in time before the deadline.
Though the 12 other travel agents in the survey had refrained from engaging in bundle sale practice of travel insurance, some did require tour members to take out comprehensive travel insurance. Some even stated that members unable to produce the proof of their own travel insurance would be barred from departure with the tours. No doubt this would cause great inconvenience to the consumers.
To take out an adequate coverage of travel insurance can provide protection to consumers travelling abroad, but as pointed out by the Council, given the very wide variety of travel insurance choices on the market, consumers should not be limited to only holders of annual travel insurance policy to be eligible for exemption, which is indirectly detrimental to the interests of consumers in the right to choose.
Many travel agents would assure consumers that the tours they enrolled would depart as scheduled but eventually the tours were cancelled for one reason or another. Consumers therefore prefer to buy their own travel insurance elsewhere after the departure of the tours were confirmed to avoid financial loss. The practice of some travel agents requiring consumers to produce proof of insurance they have purchased upon their enrolment or shortly after the enrolment for the tours is undesirable.
In addition, the survey also found that the premiums of travel insurance specified by travel agents were generally unreasonable, representing in some cases 20% to 30% of the tour prices and this is particularly obvious among the short-haul tours. In a 5-day tour to Beijing, for instance, all travel agents offered travel insurance premiums from $94 to $305, and tour prices from the cheapest $899 to the most expensive $9,998. For the tour costing $899, travel agent recommended purchase of travel insurance at a premium of $260, amounting to 29% of the tour price. Although the insurance coverage varies from one plan to another and is difficult for direct comparison, the premium in this case is obviously unreasonable.
As for the 5 travel agents requiring tour members to purchase specified travel insurance, some limited it to only enrolment online, with premiums ranging from $98 to $223, amounting to 8% to 22% of the tour prices respectively. As a matter of fact, consumers have different considerations when choosing travel insurance and travel agents should allow consumers to choose the travel insurance that best suit them in accordance with their actual needs.
Consumers should also take note that travel agents selling insurance products should possess relevant qualification. They should verify if the travel agents concerned are qualified licensed insurance agents when enrolling for package tours.
In purchasing travel insurance, consumers should take note of the following:
- Adequacy of the insurance cover: If required to purchase specified travel insurance when enrolling for a tour, ask the travel agent to clearly explain what is covered and, equally important, what is excluded in the cover. Also whether or not the protection fully covers the entire journey, including activities at your own expense, as well as whether the same protection is applicable to children or the elderly on the tour;
- Time limit for submission of travel insurance purchase proof: If you opt to purchase travel insurance on your own and the travel agent requires to submit the corresponding information of your own travel insurance, ascertain from the travel agent the terms of restrictions and arrangements, for instance, the deadline for you to submit proof of the travel insurance purchased; if you choose to purchase travel insurance from travel agent, ask in the event the tour is cancelled and whether the travel agent will refund the travel insurance premium, etc;
- Excessive purchase of travel insurance does not necessarily lead to more compensation: If the travel insurance compensation is based on actual expenditure such as medical expenses and loss of property, the policy holder will only be compensated for the actual loss, and even if you have bought an extra policy you will not receive compensation more than what you have actually lost. If the compensation is based on a subsidy model, for example, death, injury, and delay in journey protection and the policy does not rule out multiple claims, the insured can generally pursue and claim for all the policies purchased, but attention should be paid to some individual policies that may contain terms and conditions stipulating if the insured beneficiary has already obtained compensation from another policy, they would lose their right to further claims on the same insurable item(s) from that policy.
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