Is Travel Guard insurance feeding AIG’s greed?

by Janice Hough on March 20, 2009

Besides being fodder for talk shows and late-night comedians, the AIG mess pervades American life on a daily basis. If for no other reason that the whole thing is now being financed by our tax dollars.

Like many Americans, I have no problem being outraged at the bonuses. As a travel agent, the harder issue is whether or not to sell Travel Guard Insurance, an AIG subsidiary.

Travel Guard has been a favorite of many travel agents and a preferred vendor with many consortiums. And companies become preferred vendors for many reasons, usually a combination of good commissions and good customer service. (Before I get comments about agencies selling the highest paying vendors, I can tell you, if a company delivers consistently lousy service, consortiums won’t push them no matter how much they pay. It’s not work the risk of losing customers.)

In a recent letter to travel agents, Tom Zavadsky, Vice President of Sales and Marketing, said that news about the bonuses “is as upsetting to you as it has been for all of us at Travel Guard,” and that Travel Guard will become part of a new holding company called “AIU Holdings.”

Zavadsky also stated that Travel Guard will become “a more independently run company with independent board members, management team and brand identity.” (Considering that AIG as a brand is now making Halliburton look good, I know they will at least really be working on that identity issue.)

He further adds:

The thousands of women and men who work for the companies in AIU Holdings are dedicated professionals who provide valuable service and protection to more than 40 million customers throughout the world. It is important to understand the distinction between the challenges AIG faces as a result of AIG Financial Products and the continued strong and well run Property Casualty businesses of AIU Holdings.

He has a valid and rational point; the people at Travel Guard are not responsible for the stupid excesses of their parent company. And yet emotionally, somehow it’s also very difficult to sell a product that puts any money in the pockets of AIG. Or that might in any way benefit the executives who received bonuses. On the other hand, taxpayers now own 80 percent of the company, so it’s in our interests to get them back to being profitable.

So it’s a tough one. Readers, any thoughts?

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Tagged as: AIG, AIG bonuses, Travel Guard, travel insurance

  • John

    Ultimately, they sell a great product at a competitive price. Unlike most travel insurance companies, I’ve never had anyone of our clients have an issue with a covered claim not being paid in a timely manner.

    They are not the part of the company that sold the products that got them into trouble or paid the bonuses that are currently in the news (not going to touch that issue).

    Why leave?

  • http://www.agentandbroker.com Laura Toops

    I’m the editor of a publication for independent property-casualty insurance agents and brokers who understandably face the same challenges you’re dealing with.

    We recently interviewed one of AIU’s executives who explains how this division is planning to differentiate itself from AIG and how it has never been beholden to TARP dollars for operation.

    Check it out here…

    http://www.agentandbroker.com/ME2/dirmod.asp?sid=&nm=Articles&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=E2F1446737E2469AAF30038113875272

  • Frank

    He has a valid and rational point; the people at Travel Guard are not responsible for the stupid excesses of their parent company.
    ======================================================

    Same goes for airline employees, who took MAJOR concessions at most legacy carriers years ago. Yet, management at all these airlines have rewarded themselves, numerous times, with big bonuses. You better believe their pensions were NOT terminated.

  • The man who notices things

    Oh Janice – ‘outrageous bonuses?’ back when the company entered into these contracts they needed these employees – so they promised to PAY these people to stay? Bad business decision? MAYBE.

    But do you REALLY want to live in a society where ‘outrage’ and someone else’s opinion decides how much you can make and what contracts you can enter into to sell your labor. Hoe about Chris Elliott decides that needs to keep all the advertising revenue because this website was his idea, but you have a contract. And what if all of a sudden you become a pariah because of something you write, do you want to be able to collect the money rightfully yours, or is it ok for public opinion to control wether you get the money or not?

    All this fake outrage. It is unAmerican. Calling people out in Congress like Joe McCarthy. Publishing the names and address of these people so that unions can offer bus tours to harass them. Is THAT right? Is THAT the type of Change you had in mind?

    We have become a nation of whiners and harangers counting every dime that our neighbors have and shaming them if they have 5 cents more than we do.

    Shame on us. shame on you.

  • The man who notices things

    One last point – the government KNEW about these bonuses- both the executive and legislative branches knew of their existence. They just conveniently either forgot, or were completely ignorant because they were out of the loop.

    They HAD a chance to have the company void all these contracts. It is called BANKRUPTCY. We HAVE a procedure to make this happen. The government, instead of doing the SMART thing and cutting a deal to do a prepackaged bankruptcy and providing the bridge and debtor in possession financing instead decided to step in and try to do it the hard way – without bringing in new management and without taking advantage of the laws that they themselves passed to stop these sorts of things from happening. Ignorant and clueless business owners – thats what the federal government is – with government lawyers, guys who can’t make it either in private practice or corporate law departments. . ..

  • http://n/a Tony Azpeitia

    I agree with the John. It’s a great line of competitive products. A win – win for the client.

  • John Aguila

    A win-win for the client? Or for agents? AIG Travelguard is now paying travel agents up to 55% commission on travel insurance policies. Would your clients think that is a fair practice? Does that sound like an ethical company to normal people? They are going to give the industry a black eye.

    The only people winning here are greedy travel agencies and AIG Travelguard (or whoever they are/aren’t pretending to be this week).

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