The state of Florida notified three large travel agencies earlier this week that insurance offered by Prime Travel Protection might be illegal. What does its actions mean for agencies and their customers, particularly those with policies underwritten by Prime Travel Protection and other companies owned by Jerry Watson? For an insider’s view, I turned to Al Ferguson, a vice president at Legendary Journeys, one of the agencies named in the orders.
Q: An early version of last week’s story quoted a state official as saying there was an intent to order a cease and desist against three agencies, including yours, for selling unlicensed insurance and possibly also travel. But it turns out that the state was only notifying you, Palm Coast Travel and Vacation Superstore that selling unlicensed insurance was a possible violation of Florida statutes. What is your understanding of these orders? Do you intend to contest the state’s allegations?
Ferguson: We intend to completely acknowledge their intent on Prime Travel Protection. We also will explain this notice also affects hundreds of travel agencies in Florida that sold this insurance product, and two large travel agency software reservations systems — Revelex and Wincruise — that were booking engines for this insurance product.
Additionally, we will document that we discontinued selling this insurance product when we became concerned with them in September 2008. We stopped selling Prime Travel six months before this state notice was even issued.
Q: How many of your customers currently have insurance policies through Prime Travel Protection and companies related to it, such as Vacation Protection Services?
Ferguson: We have a very small number of clients affected, because we stopped selling this product last September. We have been selling Travelex insurance since.
On Jan. 26, everyone received a notice that Prime Travel Protection and Vacation Protection Services was liquidating and declaring bankruptcy, although it is unclear what they have actually done.
For all passengers that had this insurance product with close in travel, we re-purchased insurance for our clients through Travelex. This was done immediately and then new policy was issued to clients. We did this because we were concerned, especially about the need for emergency medical and transportation for our clients while traveling.
For all other passengers traveling later in the year — a very small number — we advised our clients of Prime Travel Protection and Vacation Protection Services and new Travelex protection with Legendary Journeys certificate for payment. Even before any state notice of Prime Travel Protection and Vacation Protection Services, Legendary Journeys spent approximately $100,000 to protect our clients.
Q: How many outstanding claims do you have, and roughly how much money is in dispute?
Ferguson: We have approximately 25 clients that have this situation and we have been in contact to try to satisfy their issues. If they have not been contacted, they should contact Stewart Carrier at email@example.com.
Q: I think it’s important to note that just because someone had a policy and made a claim doesn’t mean their claim would have been honored, even if it was real insurance. At this point, how do you separate the claims that would be honored from the ones that normally would be denied?
It’s difficult. But Prime Travel Protection and Vacation Protection Services, and I believe any insurance product, has a mediation remedy.
Q: How long have you been working with Jerry Watson?
Ferguson: Legendary Journeys is filing legal action against Prime Travel Protection and Vacation Protection Services and Jerry Watson for fraud and misrepresentation and would prefer not to focus on the selling of a product we believed was insurance — including hundreds of agencies in the USA and the major travel agency reservation systems.
Q: How did Watson represent his policies to you? As insurance – or trip “protection” — or something else?
Ferguson: I believe Prime Travel Protection and Vacation Protection Services’ vague point is that they are not the insurance product but the selling company. However, it was always clear that regardless of what Prime Travel Protection and Vacation Protection Services said they did, the companies behind them were insurance. They have had multiple underwriters licensed to sell insurance in Florida and other states. If Prime Travel Protection and Vacation Protection Services did not have these underwriters, the issue is fraud. It is my understanding that there are many travel insurance products that are represented by companies that are not the actual underwriter.
Q: There’s been a lot of discussion about the unusually high commissions, bonuses and overrides paid by Watson to his travel agents. Some have suggested the money they were getting from Watson made them look the other way when problems started to surface with claims. Is that a legitimate criticism?
Ferguson: I do not believe so. First, most travel agencies are selling travel insurance by convenience. This insurance product was included, at various times, by major travel agency reservation software systems. One of the largest is Revelex, and there are others. This means, when making a reservation, you could add this insurance product in the booking seamlessly.
That had nothing to do with anything other than convenience.
Additionally, when we moved to our current insurance company, the commission amount is virtually identical. It was not a motivation in our selection of that insurance product. In fact, it was highly motivated because of our reservation system. Most insurance products are nearly the same commission — at least as to the commissions offered to Legendary Journeys.
Q: In reading some of the comments on this blog, it seems there are some current and former customers of Prime Travel Protection who are unwilling to believe anything you say. What is the most unfair thing that you’ve seen in the comments, and how would your respond to them?
Ferguson: It is why I do appreciate your blog. Forums need to try to stay fair and balanced. Often that is not the case.
I think the most obvious is that they don’t want resolution, but only want blood. First, we have travel agency competition that I suspect are some of the bloggers. They can effectively compete with another agency by being so negative yet be anonymous.
Others commenting are not affected at all and only have 25 percent of the facts — for example, assuming we were selling Prime Travel Protection and Vacation Protection Services to the end … again, we stopped in September.
Additionally, while this is a dramatic issue for a small number of our clients — and we will try to satisfy them — it is important to note that while a $5,000 loss is significant, Legendary Journeys had more than 20,000 clients in 2008. The number of affected clients is extremely small.
Some bloggers have difficulty looking at a big picture. We all have interest in resolving this for our small number of affected clients and that is really the only thing that matters. Legendary Journeys will.
Q: Can you give me a timeline of your company’s break-up with Watson? When did you do it, why did you do it, and what did you tell your customers who help policies underwritten by the company?
Ferguson: September 2008. First, our reservation system, as I explained before, made a change necessary as they were concerned, at the same time legendary journeys was, about valid claim payment schedules completed by Prime Travel Protection and Vacation Protection Services.
Second, you and others began to bring to our attention problems with claim payments by Prime Travel Protection and Vacation Protection Services. Both issues helped us make the right decision to change insurance products.
Prime Travel Protection and Vacation Protection Services has a legal requirement to pay valid claims. It was not until Jan. 26, when they declared bankruptcy and liquidation – it’s still unclear what they have done — hat previous clients with valid claims — again, approximately 25 clients — had an issue. Even now Prime Travel Protection and Vacation Protection Services says they are going to pay these claims.
Our actions to satisfy our clients effected is independent of their actions meaning our clients can continue to Prime Travel Protection and Vacation Protection Services in addition to what Legendary Journeys does for them.
Q: Have you had any contact with the two other travel agencies named in Florida’s intent to order a cease and desist since the bankruptcy of Prime Travel Protection?
Ferguson: I have not. Everyone is in the exact same boat and they can decide how they wish to satisfy their clients. Again, while Florida has started with the three big agencies in the state, this will affect hundreds of agencies in the same way. This will also affect the software reservation systems, the travel agency consortiums and so forth, that were selling Prime Travel Protection and Vacation Protection Services. This will affect a gigantic number of companies. Florida indicates in the notice on Prime Travel Protection and Vacation Protection Services that many agencies sold Prime Travel Protection and Vacation Protection Services policies.
Q: Legendary Journeys is the only travel agency named by the state of Florida earlier this week that hasn’t sent me a cease and desist letter from an attorney. I feel left out! Why have you decided to engage your critics on this blog and answer my questions, instead?
Ferguson: Great question. I hope our critics stop and re-read your question.
Legendary Journeys has 10 bricks-and-mortar offices in Florida. We have been around a very long time and will continue to do so. Your question gets to my point of making sure everyone has all the facts. I won’t be redundant again from above answers, but when you have 20,000 cruise and tour passengers a year … there is always, always going to be some unhappy people. I hope we can all agree that some of those complaints are going to be reasonable and some are not.
In this instance, I apologize to our clients that we sold this product. If Prime Travel Protection and Vacation Protection Services was not licensed to sell insurance via the underwriters of the product, then fraud has been committed against Legendary Journeys.
We have tried to be responsible in this situation. We made the changes when necessary, we protected our clients when necessary, we are going back to try to satisfy our clients that have not had valid claims paid.
And my communication with you and trying to silence you or anyone else would only fail. Others can make any business decisions they want, but Legendary Journeys wants to do the right thing and Legendary Journeys will.
Q: I have to tell you, my favorite lawyer letter to date accuses me of maliciously publishing falsehoods. I take it you wouldn’t be talking with me if you felt that way. Still, is there anything I could be doing to facilitate a more open and fair debate on these issues?
Ferguson: I think you have got it. Fairness and balance. You have two posters on Prime Travel Protection and Vacation Protection Services that have incredible knowledge on Jerry Watson and Prime Travel Protection and Vacation Protection Services. I am suspicious of their motives, who they really are and why they post over and over again — and by the way, it’s America, so they can.
The most important thing is that both sides be presented and then everyone makes their own decision. Information is power and information presented in forums like this are valuable for everyone … consumer and business alike.
Q: There’s been talk about a possible investigation of Prime Travel Protection by Colorado authorities, and a possible federal investigation. Have you been in touch with any other officials from Florida, Colorado, or the federal government, in regards to Prime Travel Protection?
Ferguson: I have not. We have been totally focused on our clients affected. To be completely honest, we have not even received the notice from Florida. As you are already aware — and again, I thank you for correcting your own blog — the first notice issued by Florida was sent to [your sources] before it was sent to us. And it was wrong. It had nothing to do with travel or even insurance. It only was a cease and desist on Prime Travel Protection and Vacation Protection Services — which again, we have not sold since September.
But regardless, we will cooperate in any investigation. I am willing to wait for all the facts. The very important one is: Did Prime Travel Protection and Vacation Protection Services have an underwriter and were they licensed to sell in Florida? If they did not, [then] in addition to the tragic issue of money loss, fraud has been committed.
In the short term, we can only satisfy our future travelers — and we have — and try to satisfy valid claims, which we will.