Thomas Cook hit by insurance bombshell

Struggling travel firm Thomas Cook’s troubles continue with a major insurance blow this week.

Travel Insurance News - 12/04/2012

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A major travel insurance provider for the company’s UK-based operations said this week that it was no long willing to cover the company’s suppliers. Officials from Euler Hermes said that the risk of doing business with the ailing tour operator was far too high.

Euler Hermes is a credit provider that offers coverage to travel suppliers that must pay out after a customer goes bust. Experts say that the move poses a major problem with Thomas Cook’s current relationships with cruise operators such as Royal Caribbean and Virgin.

Thomas Cook said in a statement issued on Wednesday that none of its customers’ bookings would be affected by the news and that it would not be removing any product from its inventory. Officials also said that Thomas Cook is a “very large group” and that Euler Hermes coverage only extends to a “limited number” of products associated with third party providers.

But the news comes on the heels of a 13 per cent jump in Thomas Cook’s share prices following reports at the weekend that the firm’s top officials were close to reaching a deal with bankers for a lifeline worth some £1.2 billion. Analysts say the travel provider is hoping that Euler Homes would be willing to change its mind once the fresh line of funding is guaranteed.

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