AIG Travel Guard Insurance Plan Changes Upset Advisors

AIG Travel has dramatically altered its Travel Guard offerings starting this fall, and many travel advisors are concerned about the changes, including the elimination of commission protection provisions.

The company is eliminating its core Silver, Gold and Platinum plans, and replacing them with what it calls Essential, Preferred, and Deluxe plans. In addition, it is introducing a slew of new “bundles,” insurance add-ons for specific types of coverage or events that could happen during the insured’s travels.

“As we ready to market our innovative product enhancements and introduce our Essential, Preferred and Deluxe products, we have simplified and streamlined our compensation plans, and in doing so, will now offer a single compensation amount applicable to all products. This change eliminates the variability in compensation by product and places the appropriate emphasis on the value of the products themselves,” the company said in a late August email received by one agent. Changes took effect in September on policies sold in 38 states.

According to one AIG Travel presentation for a group of agents, that commission rate is 26%.

“In addition, we have discontinued the commission protection program,” AIG said, referring to how agent commissions paid on the travel policy was utilized by “a relatively small population of agents, yet required a dedicated and highly manual administrative process.

“In keeping with our objective to simplify and streamline compensation plans, while at the same time preserve current compensation values for our agency partners, we have increased the new compensation amounts proportionately. This upward adjustment in compensation will apply to all sales.”

Advisors aren’t happy
Travel Market Report contacted agents impacted by the changes, and most did not agree with AIG Travel’s assessment on the compensation adjustments. They told TMR that depending on what type of plans you sold prior to the changes, your agency’s average commissions could have been much higher than the current plans allow.

“We were notified, and stopped selling them immediately,” said Jodie Aubut Robichaud, Happy Travels, in Henniker, New Hampshire. “We were already transitioning, and this just pushed us right over completely. Too bad, as we liked them, but these changes are ridiculous.”

Barbara Kahn, of Vista Travel Inc., in Florida, said: “They felt commission protection wasn’t necessary any longer, but when I called my BDM at Travelex, and said this is what’s happening with Travel Guard, they assured me that they were maintaining commission protection.

“I would like to have my commission guaranteed. I used it. You work like crazy to build an itinerary for a client, and if they cancel, the insurance company gets paid, but we aren’t.”

Denise Pascucci, owner, Cape Ann Travel Services, in Gloucester, Massachusetts, also cited the commission protection cancellation, price changes, and the more complex bundling model as significant enough to merit her changing preferred insurance suppliers.

“I am considering looking around. I have used Travel Guard now for over 15 years and have been extremely happy,” Pascucci said. “Not so much now.”

One advisor with 20 years’ experience selling Travel Guard told Travel Market Report they will be looking at other providers as a result of the lower commissions and what he perceived to be higher client premium rates. 

One area that could result in higher compensation is AIG Travel’s eliminating lower commission rates for sales that have to be phoned into the company’s call center. “This means agents will now receive the same (as in higher) compensation amount for all eligible sales, regardless of sales channel,” the company said in its agent email announcement.

States where the changes have not taken effect include: Colorado, Florida, Indiana, Minnesota, Missouri, New York, and Washington. According to one document Travel Market Report obtained, AIG Travel said it was not certain when their new policies will be approved in those states. AIG Travel was contacted for comment, but the company did not reply by press time.

Other changes
AIG Travel has introduced other enhancements, including increased medical benefits on their Preferred and Deluxe plans ($50,000 and $100,000 respectively), making those benefits primary insurance rather than secondary; and cancellation coverage if a client purchased their insurance prior to finding out they are pregnant.

On its Preferred and Deluxe plans, travelers will be able to receive reimbursement for costs associated with rescheduling a departure “a few days prior to departure” to avoid a possible cancellation of a trip due to bad weather that might impact flights.

Also, on the Preferred and Deluxe plans, travelers will have the option of rescheduling their trip to another location, if the original destination might be made uninhabitable by a major weather event. “With Trip Exchange, you can exchange that trip and reschedule to another location,” the company’s marketing materials say.