Race Against Time as Travel Agents Search for DIP Replacement in Kenya

November 9, 2019 / Comments (0)

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Travel agents in Kenya have until December 15 to find and place an acceptable financial security with IATA following the announcement that the Default Insurance Program (DIP) will not be renewed for 2020. The shocking announcement follows years of uncertainty over a financial security product that has proved to be popular among the Kenyan travel agency community. 

In a communication to travel agencies, IATA said that they were not renewing the DIP cover for 2020 after the current provider Saham Assurance failed to meet new requirements they had introduced. The Kenya Association of Travel Agents (KATA) has been leading efforts to try and salvage DIP but so far, those interventions have not succeeded. “We are doing all we can including talking to both IATA and Saham to see if we can find a solution. DIP is such an important product for this market, and it has served us well for the last 20 years without fail”, KATA CEO told the KATA Weekly Travel News.

It is feared that many travel agencies especially the small and medium sized ones may fail to meet the deadline set by IATA given that it takes for instance a minimum of three months to obtain a security backed bank guarantee in Kenya. To compound the problem, travel agents have raised concerns at the delays experienced while processing the Global Default Insurance (GDI), a product that IATA has been fronting as an alternative to DIP. GDI is offered by Euler Hermes, an insurance brokerage firm based in the UK with no known offices in Kenya and only services travel agents through an online portal.

Recently, KATA hosted an emergency meeting for its members to assess the impact of the withdrawal of DIP in the market and explore alternatives that agents could pursue within the timeframe provided by IATA. Through the experience sharing at the meeting, it is evident that many are still struggling with the only two options available i.e. bank guarantee and GDI. Some agents have already had their applications for insurance cover declined without being provided with a reason. Banks are adamant that they will only provide guarantees backed by cash deposits or charged property.

KATA CEO Mr. Nicanor Sabula assured members at the meeting that the Association is in discussions with selected banks which are conversant with the travel industry to fast track the process for agents interested in getting bank guarantees. He faulted IATA for being inconsiderate to local markets when they make decisions that end up disenfranchising the market. “IATA is well within its rights to come up with new requirements that help secure the business. However, they are doing it the wrong way. It does not hurt anyone if sufficient time is provided to stakeholders to transition in an orderly manner.”

In the meantime, agents will be spending sleepless nights in the coming weeks as they work towards finding a financial security before the December 15 deadline.

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