The absence of the bank guarantees mean travel agents are relieved of the administrative and financial costs involved.

Brian Sinclair-Thompson, president of the Board of Airline Representatives Business Association, said that the new insurance programme with a claim limit was essential because last year one agent's default had caused a huge claim, which resulted in the market becoming very unattractive to insurers.

Without revisions, there was a danger of the market becoming uninsurable, which would have been detrimental to all travel agents. From 328 travel agents, 11 are considered large-scale players.

"Thai Airways supported the new programme because it kept the cost per ticket as low as possible, while being fair to travel agents," said Vasing Kittikul, executive vice president of Thai Airways International. He said that about 10 of the largest agents accounted for approximately 40 per cent of the BSP business and the top 50 accounted for 70 per cent.

Under the new programme, the exposure is based on the agents' average monthly sales over the past year. As the new coverage limit is Bt50 million per claim from Bt200 million, only the largest agents - with the strongest financial backups - exceed these limits. These few very large agents are required to place bank guarantees for the amount of their average monthly sales of over Bt50 million.

The decision was made to limit a single claim amount to Bt50 million in order to keep the cost to a minimum for the majority of travel agents. It is based on the assumption that those whose sales exceeded this amount would have the financial resources necessary to arrange bank guarantees without undue hardship, while smaller agents should not be forced to pay for insurance in excess of their needs.

With the limit of Bt50 million per claim, the insurance premium will be Bt50 per ticket from Bt55.

"Although the BSP settlement is on a 15-day basis, travel agents' sales are monitored daily and once they reach 85 per cent of their financial guarantee limit, a warning is triggered," said Chitvee Leelasiri, Thailand country manager for IATA. With that warning, travel agents should have ample time to arrange cash payment when their sales exceed the normal average.

Watcharapong Thongrung

The Nation