Florida alleges travel agencies sold unauthorized insurance policies

By | March 11th, 2009

Florida has warned three travel agencies that sold insurance policies offered by bankrupt Prime Travel Protection Services of Arvada, Colo., that its activities may have run afoul of state insurance statues.

State authorities on March 5 issued an intent to order a cease and desist against Port St. Lucie, Fla.-based Vacation Superstore, which operates Best Price Cruises; Sarasota, Fla.-based Legendary Journeys and Lake Worth, Fla.-based Palm Coast Travel, which owns the site Smartcruiser.com.

Here are the filings against Vacation Superstore (PDF), Legendary Journeys (PDF) and Palm Coast Travel (PDF).

Florida had been investigating agents who sold the insurance offered by companies owned by Jerry Watson, including Prime Travel Protection and Vacation Protection Services.

Watson said his products are not insurance and that agents do not need a license to sell them. However, Florida investigators considered his products unlicensed insurance.

It is unclear whether the allegations will stop the agencies from selling other travel insurance products. The fate of the claims made against these agencies and Prime Travel Protection by travelers who bought the unlicensed policies are also uncertain. Previously, the agencies had indicated a willingness to review Prime Travel Protection-related claims, although there had been no reported settlements.

At this point, the Notice of Intention to Issue a Cease and Desist Order does not contain a final determination but only allegations that the agencies can contest.

Al Ferguson, Legendary Journeys’ vice president, said Florida’s orders would affect “a small number” of clients involved in the Prime Travel Protection and Vacation Protection Services bankruptcy, adding, “we will resolve each issue (hopefully) to the clients’ satisfaction.”

The notice from Florida is interested…and frankly very significant. A few notes that will come from this as I understand the reading:

1. This has nothing to do with travel services but the legal ability to sell travel insurance in Florida. It is important to make the distinction that this does not have anything to do with our CORE business but rather selling insurance.

2. The state, by examples, advises that the travel agents cited do not have license to sell insurance in Florida. We will quickly admit this fact. However, this interpretation means that no travel agent can sell insurance in Florida. While we have a single point of contact that carries the license to sell travel insurance, no other employee does. For that matter, I would suspect 99 percent of all travel agents in Florida do not carry an insurance license (like Allstate, and other core insurance brokers and sellers.) This is EXTREMELY important. Because, by this definition, we could not even sell Cruise Lines insurance that is offered by them because a Travel Agent does not have a license to sell INSURANCE. If this interpretation by the state is correct, dramatic changes are going to take place in Florida. I have been in the travel business for 28 years and this has never been the state’s position.

We will resolve this issue.

I asked John Cook, president of QuoteWright.com, for his analysis of Florida’s actions.

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