The withdrawal of DIP insurance from the market has left a third of agents in Southern Africa scrambling to re-secure their Iata licences. Owner of Travel with Attitude, Martin Wheeler, describes his struggles to find an alternative guarantee method. Sarah Robertson reports.

“I have had an Iata licence for 37 years without default, which I don’t want to lose. I had cover with DIP and have been trying to secure an alternative method of guarantee since the notification that the cover would be withdrawn from the market on September 19. So far, my attempts at finding a workable solution have been unsuccessful,” said Martin.

He said initially he had tried to apply for Iata’s Global Default Insurance (GDI) option, which is offered by Euler Hermes and provides agents with a collateral-free form of financial security similar to the DIP product. Euler Hermes rejected Martin’s application without giving any specific feedback as to why his individual claim had not been successful. The insurer responded only to say that the policy had not been accepted “due to the times we are in” and suggested that the applicant should reapply again in six months, says Martin.

Travel News has already been told by ceo of Asata, Otto de Vries, that Euler Hermes declining individual GDI applications is a global issue for the agency community.

This left Martin scrambling to try and secure his Iata licence through an Iata bank guarantee. He initially applied for the guarantee through Travel with Attitude’s banking partner, Nedbank, but despite him having funds available for the bank guarantee, the bank declined his request, saying it was unhappy with the Iata guarantee template.

A Nedbank sales and service manager responded to Martin:

“I have considered the attached document, which appears to be in the format of a suretyship rather than a ‘guarantee’. As far as I am aware, it is against bank’s policy to issue a suretyship in favour of third parties, and the bank may only issue a guarantee, where the bank’s obligations are not accessory in nature and where its obligation is restricted to the payment of money only. The bank does not commit itself to joint and several ‘liability’, which the attached document provides for. All references to the attached being a suretyship should be amended so that it is a guarantee where bank’s obligations are principal obligations and not accessory to the obligations of the customer, and the bank will comply with any demand for payment received by the bank, even if a dispute may exist between the customer and the beneficiary.”

Martin contacted Iata about the issue and asked them to amend their template but the association’s Agency Risk Management department declined, saying the template had to be 100% respected.

He then applied for a guarantee with Mercantile Bank and FNB but these banks also declined his application on the basis that Iata’s template needed to be changed.

“The clock is ticking and there is only a week left until DIP’s insurance is withdrawn. I could opt to cancel my Iata licence and ticket through my consortium head office but I do not want to give up my licence after 37 years and I feel that an agent is in a stronger position to negotiate with the airlines when they hold an individual licence,” said Martin.

He added that Iata had responded, offering him a temporary solution where he could pay the
R250 000 guarantee amount over to the association, and they would hold it for him in a non- interest-bearing loan account. Martin said while he appreciated Iata’s gesture, he did not understand why he had to lose out on long-term interest on this sum of money due to Iata’s refusal to amend its guarantee template to suit the South African market.

Owner of Traveller’s Corner, Charlene Barnes, told Travel News that she had also been struggling with the Iata bank guarantee process for three years.

“The Iata bank guarantee process is a real pain. When I took over Traveller’s Corner our Iata bank guarantee was initially declined by Nedbank and Coronation Bank, due to Iata’s template wording. Eventually, I came right with a Standard Bank money market interest-bearing account. Every year when I have to renew my licence it is a struggle, and my request for the guarantee this year took four months to be approved after a struggle with various bank departments,” said Charlene.

Travel News asked Iata, Nedbank and Euler Hermes for further comment but had not heard back at time of publication.