In the line of duty

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ITIJ 194, March 2017
For employers, duty of care towards staff who are caught up in a crisis situation while on company business is reasonably clear-cut and routine. But when it comes to leisure travellers, the issue may be more complex, 
as Robin Gauldie finds out.
 
In the leisure travel sector, the concept of duty of care is just taking off, and can be misunderstood,” says James Page, senior vice president and chief administrative officer of AIG Travel. “It’s less about travel companies reacting to disaster situations – a role that’s arguably best filled by travel insurance – and more about educating consumers on the risk of these events impacting their travels.”
Page speaks from the perspective of the US. Within the European Union (EU), consumers have been protected to some extent since 1992 by legislation [known in the UK as the Package Travel, Package Holidays and Package Tours Regulations] that makes tour operators responsible for every element of a holiday bought as one package, including flights, accommodation, ground transportation and more. EU travellers who buy their travel and accommodation separately, though, do not automatically benefit from such blanket cover.
“There is a massively significant difference between flight-only clients and package holiday clients in terms of duty of care, even if they are flying with the same airline and that airline is owned by a tour operator,” says Sean Tipton, spokesperson for the British travel association ABTA.
Coming into force in 2018, the EU’s new package directive may give those who book independently greater protection against the financial failure of a supplier, but it will not be a game-changer in terms of duty of care in emergencies, industry sources suggest. Instead, insurers urge independent travellers to take out enhanced cover for cancellation or curtailment.
On paper, the new EU directive allows passengers to cancel their travel plans without penalty if the security situation in their destination changes ‘significantly’ before departure. However, much may depend on how holiday companies (and insurers) define ‘significant change’. No UK or EU legislation governs how much information tour operators must pass on to clients. Travel agents, still the first point of contact for many package holidaymakers, sell holidays to thousands of destinations worldwide and cannot be expected to have detailed knowledge of the security situation in each, beyond that which is provided by governments.
the EU’s new package directive may give those who book independently greater protection
In the US, where a higher proportion of travel bookings are made through retail agents, not package tour operators, a court ruling (McCollum v. Friendly Hills Travel Center, 172 Cal. App. 3d 83 (1985), 217 Cal. Rptr. 919) recognises that a travel agency has a duty to warn consumers of any dangers of which it is aware, but that ‘the law requires only that agents be loyal, not prescient’. The ruling’s core proposition is that a travel agent has a duty to use reasonable care, but is not an insurer. McCollum also rules that a tour operator may have a duty to warn of known or foreseeable hazards, but not to warn of possible risks.  
“It seems unlikely the new Package Travel Directive will make significant changes to the travel industry and travel insurers [in the EU],” says Stuart Lloyd, commercial manager of Collinson Group. “We need to provide assessable, clear and precise information to people so they can fully understand what their policy covers and assess whether they need to purchase additional, stand-alone products. Product innovations such as ash cloud cover or benefits for other travel disruptions are now common add-ons. These help travellers who do not book through a tour operator to upgrade policies, but there are still gaps that need to be filled.”  
 
Filling the cover gap
Such add-on cover can be the only resort for holidaymakers who are apprehensive about unrest in their planned destination and, as a result, wish to cancel their trip. In most source markets, such clients cannot expect a refund from their travel supplier in the absence of specific government advice against travel.
In the US, typically, clients with trip cancellation cover would not be covered for situations of political unrest, even if cancelling their holiday on the advice of a government entity. They would be reimbursed under a separate ‘cancel for any reason’ benefit – usually an optional add-on, though some US insurers include such cover within premium travel plans such as Travelex's Travel Max and TravelSafe's Premier plan.
These parties should also be collaborating ahead of crises – not necessarily to define roles and responsibilities, but to educate each other on what resources and capabilities they bring
When deciding to cancel flights or evacuate clients from a crisis zone, most holiday companies follow the lead of government departments such as the US State Department, the UK’s Foreign and Commonwealth Office (FCO), or Australia's Department of Foreign Affairs and Trade. The US Bureau of Consular Affairs advises US citizens to enrol in its Smart Traveler Enrollment Program (STEP) in order to stay informed regarding safety and security issues at their destination. Similarly, the FCO advises Britons to monitor travel advisories. As reported in ITIJ, the FCO plans to overhaul its advice pages, removing the terrorism threat level descriptors it currently uses for travel and instead describing the threat in terms of ‘predictability, extent, and context’. “These changes will be introduced over the coming months, building on work that officials have already begun to increase the amount of detailed information about terrorism in our advice,” said FCO spokesperson Palan Suchak.
However, says Lloyd, greater collaboration is needed between tour operators, travel insurers, assistance companies and relevant government bodies. “It’s important that all parties work together to provide consumers with greater clarity as to what they are and aren’t covered for in an emergency.” He continued: “Terror incidents such as the shooting in Tunisia [in 2015] and natural occurrences like the volcanic ash cloud [which disrupted air travel for more than a week in April 2010] have raised questions within the travel industry on the level of protection offered to travellers and where the responsibility lies to fill the gaps.”
In extreme situations, governments may charter transport to pull their nationals out of a crisis. But vacationers who expect the US Cavalry to ride to their rescue on demand will be disappointed, the US Department of State warns. Most evacuations of US citizens use commercial transport, and the State Department expects evacuees to pay for their rescue. “The US government is required to seek reimbursement from travellers who use government co-ordinated evacuation resources,” confirmed Virginia Elliott, a US Bureau of Consular Affairs spokesperson. These may include transport and medical assistance. She added: “We urge travellers to consider reviewing their insurance policies to determine what costs may already be covered and which are not, and, if needed, purchasing insurance, as the costs of evacuation can be high, and the degree to which private companies such as travel agents, airlines, and hotels may issue reimbursements or assist with evacuation costs is solely at the discretion of each company’s individual policy.”
AIG’s James Page agrees that insurance is the only way to be sure that travellers will be able to have true peace of mind. “Travellers who want comprehensive coverage shouldn’t rely on the limited provisions the government grants them,” he says. “Travel insurance works to fill this gap, and the right provider can offer not only financial protection, but will also work with travel companies and government agencies to get travellers to safety as quickly as possible.” In an emergency, the parties involved in a traveller’s debacle don’t have clearly defined roles and responsibilities, Page clarifies: “Generally, travel companies act as a critical source of information, sharing details about travellers’ whereabouts, assessing who may be at most risk, and communicating with the consumer on services they may have through their insurer, while travel insurance and assistance companies and government agencies work closely to solve the problem on the ground.” He added: “Sometimes, this means taking a back seat as governments evacuate their citizens directly. Other times, this means doing most of the heavy lifting as governments can or will do little more than dispense aid. As a travel insurer and assistance company, it’s our job to assess the situation, and act accordingly.”
add-on cover can be the only resort for holidaymakers who are apprehensive about unrest in their planned destination
Insurers may be key for Americans in extremis, but for EU nationals on package holidays, the tour operator is normally the first recourse when assistance and evacuation are needed. “From this perspective, there is often a limited call on travel insurers when the incident is still unfolding,” says Lloyd. “The travel insurer’s role usually becomes more important after the event when consumers try to make claims for compensation.” Lloyd cautions that trying to assign clear-cut areas of duty of care to insurers, tour operators and other travel principals might be counter-productive.
“It’s difficult to draw lines between different types of organisations operating in the travel sector. As emergency scenarios are often unique situations, there won’t be a one-size-fits-all solution. While existing guidance and regulations can provide useful pointers, organisations need to assess each situation in a different way. Arguably, it might also be detrimental to customers if those lines become more distinctly defined and organisations then feel less inclined to go beyond what is legally expected of them.”
From the US perspective, Greg Mitchell, of legal firm Frost Brown Todd’s Insurance Industry Group, argues that more clearly defined lines of duty would be beneficial, both to consumers and to the insurance and assistance sectors. “Broadly speaking, travel protection products can be separated into two categories: travel insurance, which is insurance coverage, and travel assistance services. Problems sometimes arise with determining which items are insurance and which are assistance services. Because the question is determined [in the US] at state level, there is often inconsistency. This is an area that is ripe for further discussion and more regulatory guidance to help draw more distinct lines between these two types of product.”
From legal and reputational perspectives, holiday companies and insurers should and often do offer their clients the maximum possible assistance in emergencies, Lloyd says. “Tour operators [in the UK and EU] are legally obliged to protect customers and their ability to provide comprehensive protection and show real concern in extraordinary circumstances can significantly affect their reputation. As for the travel insurance industry, we need to determine how much help we can offer at that point, and that might require us stepping outside of terms and conditions in consideration of the number of factors in play.” Policy limits, for example, are there for a reason: “As travel insurers, we need to determine what assistance we can provide as there are exclusions in place. That said, in order to provide assistance in extraordinary circumstances, a judgement call will have to be made on a case-by-case basis depending on a number of factors, such as the actual circumstances and number of people affected.” Travel insurance has the ability to plug the gap when accommodation or travel providers decline to recompense guests who have booked independently or to waive pre-contracted payments, Lloyd adds.
As emergency scenarios are often unique situations, there won’t be a one-size-FIts-all solution
Mitchell notes that in the US, travel agents and tour operators present ‘an interesting issue’ because they may act purely as vendors of travel, or additionally as procurers of travel insurance and protection plans: “The duty of care that applies may be different depending on which of these capacities the travel agent is acting in. Where a travel agent or tour operator also offers travel insurance, a separate duty of care may apply regarding the insurance transaction. State statutes or case law may supply an additional duty of care for those who procure insurance for, or sell insurance to, consumers.”
 
A balancing act
Summing up, the actors in play on a stage that throws up an ever-changing set of challenges seem to be discharging their roles quite well. AIG’s James Page concludes: “If these parties have too narrow a view of their responsibilities, things will fall through the cracks. The consequences of everyone going ‘above and beyond’ and potentially duplicating efforts may be minimal. That said, preparation – in particular, by educating consumers on risks and ways to minimise them – is critical. This has historically fallen to travel insurers. With travel companies embracing duty of care on the leisure side, the hope is that all parties will have a role. These parties should also be collaborating ahead of crises – not necessarily to define roles and responsibilities, but to educate each other on what resources and capabilities they bring, and to build relationships they can leverage in an emergency.
 
“A huge priority is making sure people don’t overestimate the support the government and travel companies will provide, and don’t underestimate what we insurers do. It’s vital that travellers don’t see us purely as a financial benefit – a faceless company they’ll file a claim with after the fact – but rather as a team of experts who can help solve their problems if only they give us a call.