Why do you think the state decided to revise its intent to issue a cease and desist today?
The intent is unclear. I think there is even conflicting opinion in Tallahassee on this.
We have complied on anything asked and submitted a mountain of paperwork to support everything that occurred. The revision is the same notice [we received a year ago] to not sell Prime Travel Protection policies. We stopped doing that six months before the first intent was issued.
What do the recent intents to file cease and desist orders by Florida against three travel agencies — Vacation Superstore, Legendary Journeys and Palm Coast Travel — mean for travelers?
I asked Barry Resnick, who has become something of an expert on the sale of unauthorized travel protection insurance plans. Resnick’s mother held a policy with Trip Assured, a Tennessee company that sold unauthorized trip protection plans. (I featured his comments in my MSNBC column last week.) Florida and five other states issued cease and desist orders against Trip Assured between 2005 and 2006. Jerry Watson began working at Trip assured in 2002 and left in early 2004 to start his own company, Vacation Protection Services, the predecessor to Traveler Protection Services and Prime Travel Protection.
Since the time his mother made a claim against Trip Assured that was eventually denied, Resnick has tracked these unauthorized companies and the agents selling the policies, working closely with the various state and federal investigators. But as a professor of counseling, Resnick also has an academic interest in recent events — as a case study in human behavior. I asked him for his perspective on the recent Florida rulings. Here’s our interview:
Q: What do the recent rulings mean for travelers?
Resnick: Simply put, it means buyer beware — not only for the product, but the seller of the product. It’s disappointing because many of these travelers relied on their travel agent for appropriate recommendations.
Q: What about travel agencies?
Resnick: Based on the intent to order a cease and desist, it’s rather confusing. The orders obviously put a stop to the sale of unauthorized insurance and insurance-like products. However, there seems to be issues with licensing that will need to be clarified. In speaking to the department’s legal counsel, it appears that this is just the beginning of a much larger investigation that entails several governmental agencies within the state of Florida and possibly the federal government.
Q: I read an interesting story in the Sun-Sentinel about one of the agencies, and it certainly seems like this is an innocent mistake. Do you think it is?
Resnick: I would hope a travel agent who sells insurance would be able to differentiate between legitimate insurance and non-insurance. However, based on the many sophisticated investors who were scammed by Bernard Madoff, I can condone an honest mistake.
When the Trip Assured investigation was being conducted, our lawyers received dozens of phone calls from both consumers and travel agents who purchased the unauthorized plan. The lawyers asked me to handle several of the calls as the volume was tremendous. I spoke to many people, including some very large producing travel agents. I certainly hope that those who were involved with Trip Assured did not sell Prime Travel Protection. I have been told that this issue is the focus of the state’s investigation to determine if any of the travel agents are repeat offenders.
Q: The press release issued by Florida makes this look like a minor infraction. No actual cease and desist orders have been filed. Isn’t this an almost victimless crime, in which only a handful of travelers lost their vacations?
Resnick: The state regulators usually act on complaints that are filed. I found in my personal investigation that many individuals do not even file with the state regulators. Therefore, the exact number of individuals who lost their vacations cannot really be determined. However, because it has been determined that these “policies” were unauthorized, even those individuals who did not file a claim may be entitled to a refund of their premium.
Q: Describe what’s at stake for the travel agencies selling these policies.
Resnick: The best word to describe what’s at stake for these travel agents is simply, “trouble”. The state has a lot of leeway in regards to how they may proceed. Civil and criminal penalties are possible. Individuals can also file civil lawsuits against their travel agent. Of course, it’s up to the courts to determine an agency’s liability. I would think a judge would be fairly sympathetic to a senior citizen who claims he or she relied on the travel agent’s advice in purchasing insurance. This will especially hold true if the individual bringing the lawsuit can prove that their travel agent has a track record of selling unauthorized travel protection plans. I know of a few such cases that were filed against the travel agency. Each was settled prior to trial.
Q: What’s the extent of the damage for travelers?
Resnick: I would hope at a minimum the cost of the trip and refund of the premium for those who filed a claim and those who did not. I know one traveler who passed away while battling for his claim. His family told me they were going to sue for damages against the travel agency. I do not know if the lawsuit was ever filed. In our litigious society it wouldn’t surprise me to see multiple lawsuits filed for damages above the cost of the trip. Whether the plaintiffs would prevail is another question.
Q: Do you think state and federal investigators are aware of the magnitude of this problem? And if not, why not?
Resnick: I know federal investigators have been made aware because I have been told by some individuals they have already contacted the Federal Trade Commission and the Department of Justice. Within the DOJ, the investigation would be assigned to an Assistant U.S. Attorney in the geographical region of the complainant. The Assistant U.S. Attorney would ask the FBI to conduct an investigation. These investigations can take a very long time and quite often those under investigation are unaware until an indictment is made. The state of Florida is very aware of the magnitude of this problem and they have been in communication with their counterparts in other states. It’s also possible the respective state investigators will share their information with the federal authorities.
Q: Are there any other travel agencies involved in this?
Resnick: As I mentioned, I spoke to many travel agencies a few years ago. I cannot recall offhand who I spoke to. I made copious notes that I plan to locate. I hope that none of the travel agencies I spoke to are involved with PTP. The Florida authorities did indicate that they are still looking at other travel agencies. I am personally not aware of any other agencies, but I am certain there must be more than the three who were issued the orders.
Q: In an interview with Al Ferguson of Legendary Journeys, he says only a a very small number of his clients are affected by the Prime Travel Protection and Vacation Protection Services bankruptcy. What’s your sense of how many travelers are currently affected by this scandal?
Resnick: That’s great, then Mr. Ferguson should pay them off right away. Everyone who purchased one of these plans has been affected. The plans are illegal. When asked about how claims will be honored, Mr. Ferguson responded that insurance products have a “mediation remedy”. He is absolutely correct, but what he does not seem to understand is the products he sold were illegal and are not insurance products. There is only one remedy in such cases and that is full reimbursement for the cost of the premium and claim, if filed.
Q: Legendary Journeys apologized for selling Prime Travel Protection and Vacation Protection Services. It’s so rare to find an executive apologizing for anything, and I have to be honest — I’m impressed. How about you?
Resnick: It’s admirable Mr. Ferguson has apologized, but he has to stop pointing fingers. He continues to put the blame on Prime Travel Protection and Vacation Protection Services and feels because other travel agencies have engaged in these activities it is somehow OK and he is not at fault.
Q: When I asked Ferguson how long his agency had been working with Jerry Watson, he answered by saying his agency was going to sue Watson. What do you think of that answer?
Resnick: I think Mr. Ferguson is evading the real issue here. First of all, he should immediately put his resources into reimbursing his clients. Many of these consumers are senior citizens and waiting years and even months is simply not acceptable. Last summer you posted information about Paul Donohue, a PTP claimant who purchased his trip protection plan from Legendary Journeys and was fighting for his claim refund. Unfortunately, Paul passed away this past week. He was a man of modest means and his wife is now left in a financial bind. How many other Paul Donohue’s will pass away before these travel agencies do the correct and moral thing and reimburse their clients?
I find it curious why Mr. Ferguson failed to answer the simple question of how long he has been working with Mr. Watson.
An Internet archive search shows that Legendary Journeys was selling “trip protection” plans as far back as 2003 and calling it “insurance”. This coincides with the time Mr. Watson was employed by Trip Assured and perhaps is the reason Mr. Ferguson failed to respond to your question regarding the longevity of his relationship with Mr. Watson. In my review of the archived Web sites, I found that the contract terms of these plans looked similar to the types of plans that are considered unauthorized by state insurance regulators. If Mr. Ferguson was indeed selling the same type of illegal trip protection as far back as 2003, this could be a very serious issue.
Q: Is that your only concern?
Resnick: No. Mr. Ferguson repeatedly refers to Vacation Protection Services. This company was issued a cease and desist order over two years ago by the state of Tennessee. I find it incomprehensible that Legendary Journeys would be selling a product from this company under the circumstances, especially after the date of the cease and desist.
Mr. Ferguson continues to use the excuse that Legendary Journeys was actually the victim and they were defrauded by Mr. Watson’s companies. As one of the largest travel agencies in Florida, if not the country, this is simply not an acceptable excuse.
The sale of unauthorized insurance by travel agents was widely publicized when Trip Assured was issued a cease and desist order in September 2006. Every trade publication covered the issue multiple times. A travel agency as large as Legendary Journeys certainly should have been aware of this matter considering the action was taken by the very state Legendary Journey conducts the majority of its business – Florida.
For a travel agency to engage in the sale of the same type of illegal product after the September 2006 Trip Assured cease and desist is incomprehensible in my opinion. More shocking, however would be to learn that an agency sold illegal trip protection through another unauthorized company and then later sold again through Prime Travel Protection.
As I write this, an investigation is underway to determine which Florida travel agents were involved in these illegal sales prior to Prime Travel Protection. It is my understanding the findings will be made public this week.
Q: I’ve received no fewer than three cease and desist letters from agencies and their lawyers, trying to stop me from publishing blog posts about them. Is this a tactic commonly used by agencies that sold Watson’s policies?
Resnick: This is typical behavior. I was threatened in a similar manner as was my mother and several others who pursued their claims. Threatening letters from lawyers, intimidating correspondence to the employers of those seeking claim reimbursement were common tactics. It’s just a way to move the focus away from the actual issues. My guess is whoever sent you the letters are possibly the individuals who have the most to hide – perhaps they are the agencies who have sold these unauthorized products over and over again. It would be very beneficial to your readers, Chris is you would share the name of the travel agencies who have threatened you.
Q: What should travelers do to make sure they don’t get caught with a worthless policy?
Resnick: Travelers need to be smart consumers and should thoroughly investigate their travel agent. The BBB provides a rating for many travel agents and that is a good indication of their reliability.
Q: Do you think it’s still safe to do business with these three agencies, and any other agencies named in a future complaint?
Resnick: I would hope they have learned from this unfortunate experience and make good on all claims. There is a saying that lightening doesn’t strike twice, so one would assume these agencies would certainly not sell unauthorized products again. The question that remains: Is this the first time that these travel agencies were involved in such sales? We’ll leave that question to the state regulators or perhaps an investigative reporter. I do believe if any of these agencies are found to have sold such unauthorized plans in the past, criminal charges will be filed.
Q: What do you expect next?
Resnick: I expect the state of Florida is going to take a serious look into who has engaged in the sale of these types of products in the past and who currently sold through PTP. I also believe the results of Florida’s actions will dictate the role of any federal investigation.
Q: As a psychology professor, what has this experience taught you about human behavior?
Resnick: Just like those who invested with Bernard Madoff – greed can be a powerful aphrodisiac. Prior to 2006, with the companies that preceded Prime Travel Protection and currently, travel agents were provided huge incentives for selling these unauthorized plans. They were given overrides and signing bonuses and may have made more money selling unauthorized insurance than cruises and tours. I honestly believe that greed overruled common sense.
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 firstname.lastname@example.org.
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.
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.
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.
“This is an interesting turn,” he told me. “There are probably several infractions of Florida law.”
1. An unlicensed insurance company is selling policies in their state without being licensed.
2. the unlicensed insurance company is selling policies that have not been approved by the Florida Insurance Department.
3. The Florida agents who sold the products to consumers did not hold insurance agents licenses in Florida or if they did because they represent/ed a properly licensed company than they were not properly appointed by the unlicensed travel insurance company.
4. An individual or firm, whether properly licensed as an insurance agent or not, who sells an unlicensed product can be held responsible for the benefits promised under that product. This last part is important because even though the “service contract” company has gone into bankruptcy there is no protection for agents that sold the insurance and they may not only be subject to fines but they may also be held liable for any claims that otherwise would have been covered by the policy.
I think there will be more to come.
Update (March 12, 3:40 p.m.):
The state of Florida has issued the following press release:
Thursday, March 12, 2009 3:21 PM
Subject: CFO SINK NOTIFIES TRAVEL AGENCIES TO STOP REPRESENTING UNAUTHORIZED TRAVEL INSURERS
FOR IMMEDIATE RELEASE CONTACT: Nina Banister or Jayme O’Rourke
March 12, 2009 (850) 413-2842
CFO SINK NOTIFIES TRAVEL AGENCIES TO STOP REPRESENTING UNAUTHORIZED TRAVEL INSURERS
TALLAHASSEE-As a result of ongoing investigations into complaints about the sale of unauthorized travel insurance in Florida, Chief Financial Officer Alex Sink has notified three travel agencies that she intends to order them to stop selling insurance on behalf of Colorado-based Prime Travel Protection Services, Inc. and any other unlicensed travel insurer. Prime Travel Protection Services, Inc. was run by Jerry Watson in Colorado.
Sink issued legal notices to Palm Coast Travel, of Lake Worth; Vacation Superstore Network, Inc., DBA Best Price Cruises, of Port St. Lucie; and Legendary Journeys, Inc., of Sarasota, charging that they violated state law by selling insurance for Prime Travel, which is not licensed in Florida to sell insurance. The travel agencies have 21 days from the receipt of the Notice to respond. Other travel agencies are currently under investigation and may be named for selling this product.
Travel insurance can protect consumers against costs from unforeseeable circumstances, including trip cancellation, early return and emergency medical needs. Sink advises consumers to get confirmation that the insurer providing travel insurance protection is licensed by the State of Florida (Office of Insurance Regulation) before purchasing the product.
Consumers should also read the fine print before making a purchase, as the policies often contain exclusions for coverage, and obtain a schedule of benefits and a certificate of coverage. If the insurer providing travel insurance coverage is not licensed, claims may not be honored.
Floridians are encouraged to “verify before they buy” and contact the Department of Financial Services with any insurance questions or concerns. To verify licensure or to file a complaint, log on to www.MyFloridaCFO.com or call 1-877-My-FL-CFO (1-877-693-5236).
As a statewide elected officer of the Florida Cabinet, Chief Financial Officer Alex Sink oversees the department of Financial Services, a multi-division state agency responsible for management of state funds and unclaimed property, assisting consumers who request information and help related to financial services, and investigating financial fraud. Sink also serves as the State Fire Marshal.
As I noted when I published this late yesterday, this is a fast-developing story. The original post contained information from an official source that was imprecise.
A representative from the state of Florida confirmed the intent to order a cease and desist yesterday. At the time, it was suggested to me that the agencies didn’t have a license to sell travel insurance and might also not have a license to sell travel.
This morning, I obtained the orders from a different source, which suggested the state’s actions only involved selling unauthorized insurance. I’ve updated the post to reflect that new information, and I apologize for any resulting confusion.
Update (March 13): John Cook responded to some of the comments on this post with an important point about liability.
There appears to be some confusion about whether or not travel agents have to be licensed in the State of Florida and at least one comment that this is new and that all or most travel agents are in violation.
Businesses in Florida have two types of licenses that they have to secure if they want to sell travel and travel insurance:
1. Seller of Travel registration: “Any seller of travel that has a business location in Florida or that offers to sell travel related services to persons in Florida for individuals or groups. As of July 1, 2008, an annual filing fee of $50 is required for each independent sales agent (s.559.928, F.S.).” This registration is with the Department of Agriculture and Consumer Services.
2. Travel Insurance License: “2-41 Resident Travel Insurance (Firm) Florida Statutes 626.321 (1) (c) defines “TRAVEL INSURANCE” as insurance against accidental personal injury or death covering the risk of travel. The license may be issued only too: To a full-time salaried employee of a common carrier or a full-time salaried employee or owner of a transportation ticket agency and may authorize the sale of such ticket policies only in connection with the sale of transportation tickets. No such policy shall be for duration of more than 48 hours or for the duration of a specified one-way trip or round trip.” This license is a limited license and does not have the same educational and/or examination requirements as required of life or personal lines insurance agents.
Just because a travel firm has registered with the Department of Agriculture and Consumer Services as a “Seller of Travel” it does not give them the authority to sell travel insurance without the Travel Insurance License that they must obtain from the Florida Department of Financial Services.
Contrary to some of the comments from readers many travel agents in Florida are licensed for travel insurance. A quick check on the Insurance Division’s web site shows that there are over 2,300 such agents in Florida.
Here is another section of Florida State Law that might help consumers. I mentioned it earlier but here is the specific:
Title XXXVII, 626.901 Representing or aiding unauthorized insurer prohibited.–
(2) If an unauthorized insurer fails to pay in full or in part any claim or loss within the provisions of any insurance contract which is entered into in violation of this section, any person who knew or reasonably should have known that such contract was entered into in violation of this section and who solicited, negotiated, took application for, or effectuated such insurance contract is liable to the insured for the full amount of the claim or loss not paid.
(3) No insurance contract entered into in violation of this section shall be deemed to have been rendered invalid thereby.
As I stated before it’s the responsibility of the travel agent to vet any company that they sell.
Kay Schroll says she lost $6,820 — the price of two cruises — when she bought travel insurance through Legendary Journeys, but then had to cancel her vacations for health reasons. Her case is just one of many that have landed on my desk since the bankruptcy of Prime Travel Protection, the Colorado company that offered these unlicensed policies.
Florida authorities are now investigating travel agents who sold or gave Prime Travel Protection to their clients.
Schroll had booked a 14-day Spain and Western Mediterranean cruise and a 17-day Panama Canal itinerary.
For the first cruise, our agent sold us what she claimed to be travel insurance through a company called Traveler Protection Services, later called Prime Travel Protection. For the second cruise, our agent sold us travel insurance through Prime Travel Protection.
We had to cancel both cruises for health reasons. My husband was diagnosed with bladder cancer and was undergoing weekly treatments during the time of the first scheduled trip. Shortly before time for our second trip, I experienced severe abdominal pains and was going through various tests and was on antibiotics, with additional tests scheduled. It was necessary to cancel trip number two for medical reasons, also. Travel insurance should have covered both of these cancellations.
It turns out Prime Travel Protection wasn’t travel insurance. In fact, a few months after we paid Legendary Journeys $602 for our “policies,” Prime Travel Protection went bankrupt, and we lost our entire vacation.
We have tried to contact Prime Travel Protection. Whenever we called, we were initially told they can’t answer because of “heavy volume,” and now we’re told they are in the process of liquidating. We’re upset at our agency for selling us what appears to be bad insurance.
According to Florida regulators, Prime Travel Protection wasn’t authorized to sell insurance, and neither were travel agents.
I asked Legendary Journeys to look into her claim. I heard back from Stew Carrier, a customer service specialist and group tour coordinator, almost immediately.
I’m impressed with the company’s response. Instead of sending me a cease-and-desist letter, which seems to be the preferred method of dealing with unhappy customers and the bloggers who write about them, Carrier took the time to carefully answer Schroll’s question:
As you may be aware, Prime Travel Protection/Universal Assurance group worked with about 150 Travel Agencies across the state of Florida. At the time of their bankruptcy we estimate there were several thousand policies and claims that have been affected.
Since the notification, Legendary Journeys has sent communication to all of our guests whom have yet to travel and had a policy affected by this claim. We offered all of our guests an alternative policy, because their Prime Travel Protection policy is no longer valid, and we also offered all guests a future travel credit in the same amount as their new policy purchase. Legendary Journeys is the only travel company in the state of Florida, to the best of our knowledge, doing anything on this scale currently.
In reviewing the two bookings below I discovered that one of the canceled bookings, Panama Canal, was in fact in 100 percent penalty with the cruise line at the time of booking. The other cancellation received the due reimbursement from Legendary Journeys based on the penalties assessed by the cruiseline.
Unfortunately, Jerry Watson [Prime Travel Protection’s president] decided to file bankruptcy and/or liquidate all assets on Monday, January 26, 2009. This is when Legendary Journeys received notification from Mr. Watson via e-mail that he was receiving legal council and would be liquidating all of his assets. He goes on to state:
“Based on the information that I have received from legal counsel, claims adjudication will be handled either through the courts or the Trust. Funds for claims settlements will be derived from asset liquidation.”
Mr. Watson will be administering Chapter 7 Bankruptcy or self liquidation via a Trust Receivership.
While Legendary Journeys is very sympathetic towards the frustrations being suffered by all of our clients, and the many other non-Legendary Journeys clients, because of this bankruptcy we are not responsible for the legal ramifications. Legendary Journeys is not a travel insurer, Legendary Journeys acts as an intermediary, or refer, to our guests for travel Insurance only.
Legendary Journeys will, however, analyze the cancellations of the bookings outlined by our client and see if it is possible to move some of the funds paid to another travel booking.
In the meantime, I recommend contacting the Attorney General’s Offices in the states of Colorado or Tennessee to see if they can assist in the administration of the bankruptcy.
Soon after that, apparently in response to some of the questions that were being raised on this blog, Carrier sent another note:
In following up with this situation I want to add a few points about what Legendary Journeys is and has done:
• VPS Travel Protection Services was (as far as we were told by them) licensed to sell travel in Florida and all 50 states through their underwriter United National Underwriters and Maxbermuda.
• Legendary Journeys is not in the insurance business and we only act as the intermediary for the insurance provider.
• We have no way of validating the insurance provider’s claims and certainly if they commit any fraud to Legendary Journeys or the traveling public.
• VPS Travel Protection Services provided travel protection to our clients for nearly 3 years and claims where paid, emergency medical was provided.
• In approximately September 2008 the State of Florida asked about VPS Travel Protection Services and for us to provide information to them about their licensing in Florida. Legendary Journeys provided all the information requested and documents available to us.
• In approximately September 2008 we discontinued our association with VPS Travel Protection Services and established a business relationship with TRAVELEX Insurance who has registration rights to sell insurance in all 50 states.
• The vast majority of all Legendary Journeys guests with travel in 2009 have insurance in force with Travelex Insurance and Travelex participates in whatever regulatory requirements the State of Florida and all other states require.
• Hundreds of travel agencies in Florida and thousands of travel agencies in the United States provided VPS Travel Protection Services travel insurance coverage. Legendary Journeys acted quickly when issues were raised on their ability to sell (or their underwriters) in the state of Florida.
• In late January 2009 Legendary Journeys received a fax (and a message was placed on their phones) saying VPS Travel Protection Services travel insurance was filing Chapter 7 Bankruptcy liquidation. We had no notice of this action until it was done.
• Legendary Journeys immediately purchased insurance policies to immediate clients traveling within short notice a re-insurance policy through Travelex to ensure our clients protection. This out of pocket expenditure was approximately $50,000.
• Legendary Journeys sent a letter, email and phone call to all other pending clients that had a VPS Travel Protection Services insurance policy to advise them of bankruptcy and they would have to process claims through the bankruptcy proceeding. Additionally, we offered those clients a Future Travel Certificate in the exact amount of insurance cost to re-insure through Travelex (in effect offsetting the expense of new insurance.) The vast majority of our guests exercised this option and can file through the bankruptcy proceeding AND take Legendary Journeys offer for future credit.
• Legendary Journeys is researching all clients that have already traveled and filed a claim with VPS Travel Protection Services and evaluating each discovery on a case by case basis. These clients also have a case through bankruptcy proceedings.
What does all of this mean?
For people like Schroll, it may be difficult — if not impossible — to get a claim paid.
Travel agents who sold Prime Travel Protection and similar policies have a hard decision to make. If they don’t find a way of making clients like Schroll happy, Florida authorities are almost certain to hear about it, and that could have repercussions for any agency that offered Prime Travel Protection insurance.
Something tells me this won’t be the last post about Prime Travel Protection.
Virginia Hamlin is upset.
A year ago she booked a Panama Canal cruise through Legendary Journeys, a travel agency based in Sarasota, Fla. At the time she was offered a $177 “travel insurance” policy through Travel Protection Services.
Last week, Legendary sent her a registered letter with some bad news:
Our travel insurance company, Travel Protection Services, Inc., had filed for bankruptcy. There was no recourse for us except to buy new insurance with a company, Travelex.
They offered to give us a $200 credit on our next trip to make up for the inconvenience. At this point we have completely paid for the trip, and if I read the instructions correctly, the most we could expect to get back is 50 percent of our payment, or less.
This has opened up all kinds of questions for me. There doesn’t seem to be any recourse.
Actually this has opened up all kinds of questions for a lot of folks.
Curiously, I’ve already received two letters from attorneys about the comments on the latter posting, which I find a little disappointing. I’m used to them coming after me, not the commenters whose opinions are completely protected under the Communications Decency Act.
A review of the 100+ comments, and Hamlin’s case, leads me to believe there’s one big question that’s begging to be asked: Are travel agents who sold travel “insurance” that wasn’t insurance liable in any way?
There are two answers. If customers were advised that this wasn’t insurance, and that it might not cover them the same way traditional travel insurance would, and they still signed up for it, then I think agents are off the hook.
But if agents presented this as insurance, sold it as such, and left their customers with the impression that they were covered as if they had insurance, then their customers have every right to be angry.
“I think Legendary is guilty in this situation because they should have checked better on the company they associated with,” Hamlin told me.
Legendary would not respond to my requests for a comment the last time I wrote about it, but a representative found the time in early December to post the following comment on my blog:
Legendary Journeys discontinued selling this insurance product when all of this came to our attention. We now sell Travelex, licensed to sell insurance in all 50 states.
I share some of the skepticism in the comments made by Hamlin and others. I find it difficult to believe travel agencies were completely unaware of the problems with Travel Protection Services.
But I don’t know that for a fact. Maybe that’s something for a judge to decide.