Australian travel insurance online marketer iTrek’s “The Travel Agent Is Dead” consumer promotion is the latest – and most extreme – salvo in a running battle between online purveyors and Australian travel agencies over the cost of travel insurance and the policies that consumers should purchase to meet their needs.

Australian Federation of Travel Agents (AFTA) CEO Jayson Westbury tells Travel Market Report that the travel industry Down Under is disgusted by the iTrek campaign, which he called a “degrading and awful” message that should not be used to sell any product.

According to reports in the Sydney Morning Herald, a series of advertising campaigns and media reports about buying travel insurance from agents has burned travel agents with claims that policies purchased online can be up to 50% cheaper – claims that AFTA calls “outrageous.”

It has asked the Australian Securities and Investments Commission to look into the price and product comparisons by online purveyors that AFTA says are unfair and may constitute "false and deceptive" conduct.

"There's a number of ads floating around on radio and TV where I think consumers are being misled by some of these online direct sellers," Westbury told the Sydney Morning Herald.

The issue centers on how much commission travel agents mark up from the basic cost of the travel insurance policy.

A consumer group, Choice, claimed in 2008 that agents received up to 50% of a policy premium in commission, the newspaper reported, while online marketer Travel Insurance Direct, says its policies carry lower commissions – less than 30% per cent – by cutting out some intermediaries such as travel agents.

AFTA, however, notes that commissions are generally, at most, 20% of the typical cost of a policy bought through an agent.

"That margin is just not there anymore; it hasn't been for some time," Westbury told the newspaper. "Of course [agents] make a margin to sell the insurance product; they're in the business to make money. So do the people who sell it online."

The controversy over agency practices flared after a news report early this year quoting two anonymous travel agents who claimed commissions of 40% were "bread and butter" for the industry.

The Sydney Herald pointed out in its article that “it is fair to question to what extent consumers are equipped to make informed decisions about travel insurance policies. Most insurance products are sold with the advice and guidance of an agent who is trained to ask the right questions and point out any exclusions and required declarations, while those booking travel insurance online are left to read the fine print.”

Indeed, Westbury told the newspaper that if travel agents are cut out of the equation, consumers might incorrectly complete applications or buy the wrong insurance only to encounter problems when filing a claim.

Westbury said that the online insurance sellers offer loss leader pricing to buy market share. He told the Sydney Morning Herald, "The underlying message is buyer beware.”

The iTrek "The Travel Agent Is Dead" promotion has drawn only one entry so far, judging from visits to the Web site. The do-it-yourself insurance company is offering travel prizes to what its hired judges deem the best online commercial for iTrek's products.

The company's Web site states that it is the Australian agency for and its insurance is underwritten by Chartis, an American International Group company that also owns Wisconsin-based travel insurer Travel Guard, which has won accolades from U.S. travel agents for its partnership efforts.

Australia's iTrek, however, tells a different story on its Web site: "When you buy direct through iTrek you can save hundreds as we do not sell through Travel Agents. By operating online we are able to minimise (sic) unnecessary overheads and enhance our levels of customer service. This enables iTrek to provide you with the best travel insurance policies at the lowest prices."

Travel Market Report's requests for comment on the campaign from iTrek have gone unanswered. The iTrek public relations representative, Anna Rizzo, referred questions to representatives at  the company. These queries include: Why was this theme selected and how effective has it been for iTrek? Was there any concern on iTrek's part that its campaign could damage the Chartis U.S. brand, Travel Guard, among travel agents in North America?

Similarly, Travel Guard's executives and public relations representative at posting time had not responded to requests for comment.