Corporate Cards Help With Travel Disruption Costs

Travel disruptions can be a pain for corporate travelers—and for corporate travel budgets.

More than a million plane flights were delayed or cancelled during the winter of 2014 to 2015, up 25% from the year before.

Winter travel disruptions cost business travelers an estimated $5.3 billion in lost productivity and direct expenses, according to industry analysts at masFlight.

Lost productivity is, well, lost.

But those other costs, items like last minute hotel stays when flights are cancelled, unexpected F&B or ground transportation, lost luggage, hotel and other cancellation fees, might be recoverable.

Loss recovery
The emphasis is on might, said Steve Pedersen, vice president of North American Corporate Card Products for BMO Financial Group. Loss recovery has three components, he said.

• Corporate travelers must use the corporate card.

• The card must carry the appropriate insurance provisions.

• Travelers must work with the travel department to submit and collect claims.

“Road warriors often don’t realize that insurance is one of the most important reasons to use the corporate card,” Pedersen said. “Even travel managers occasionally need to be reminded that they have an avenue for loss recovery by way of their corporate card insurance cover.

“But travelers have to proactively file claims.”

Say the company had a traveler caught at Logan International in Boston during storms Juno in January or Marcus in February.

Both storms made the list of top ten heaviest Boston snowstorms on record. The airport was closed, flights were cancelled and hotel space was at a premium as thousands of would-be travelers were grounded by weather.

The airlines didn’t have to worry about traveler expenses because flight cancellations were caused by weather, Pedersen said.

Corporate travel budgets had to absorb the extra costs, unless the corporate travel card included flight cancellation and delay insurance.

With corporate card insurance, the traveler simply paid the hotel bill, submitted an insurance claim, and the insurer, not the company, ultimately picked up the tab.

Containing the damage
Most road warriors remember to skip collision damage waivers at the car rental counter because the corporate card already includes the coverage.

They don’t always remember that corporate cards typically carry a dozen or so coverages that can help cushion the costs of travel disruptions.

“If the traveler didn’t know about the insurance cover and the travel manager didn’t remind him or her, the company incurred incremental costs that could have been avoided,” Pedersen said.

“As much as we try to remind people that that have insurance cover, it is a constant battle to get claims filed and followed up on.”

Travelers’ behavior
BMO issues Diners Club corporate accounts and is trying to leverage its cardholder benefits. As the card issuer, BMO has little direct influence on traveler behavior.

But the travel department does, especially during travel disruptions. Company travelers almost always know to contact the call center whenever they get hit with a travel delay.

The call center can—and should—remind travelers to file the appropriate insurance claims as part of the rebooking process, Pedersen said. That’s the kind of value added service that travel managers can build into their TMC contracts.

“Travel manager awareness of corporate card insurance cover is superior,” he said. “But when it gets to individual travelers, the knowledge level slips.

We need to increase the level of awareness and the understanding of coverage.”