Government backs proposal to set up fund for covering tourists’ losses

The Cabinet supported the Economy Ministry’s proposal to create the fund, which will be tapped into if tour operators’ insurance coverage is insufficient to cover all losses.

“If your tour operator becomes insolvent during or before your trip, if bankruptcy or liquidation proceedings against the company have started and it is no longer financially capable of refunding your money for the trip, the fund would then guarantee 100 percent of your possible losses,” Economy Minister Mindaugas Sinkevicius said during the Cabinet’s meeting.

Currently, if a tour operator becomes insolvent, tourists’ losses are covered from the state budget.

Tour operators will have to contribute up to 1 percent of the cost of each trip to the fund at the end of each quarter.

Major tour operators say they are opposed to the idea.

“We have already insured every euro we get from our customers. If we need to obtain further insurance, we will do so individually, not collectively,” Novaturas’ lawyer Grazina Noreike told BNS in a comment.

“Practically, it would be as if every customer had to pay a part of money for their trip into a single account. Who would want to pay for others?” she said.

According to the lawyer, such a collective safeguard measure did not work when Qualispresenca, a Portuguese company that organized trips to Madeira and the Azores, cancelled flights and Lithuanian tourists did not get their money refunded. Portugal has a tour operators’ guarantee fund, but Lithuanian nationals’ requests for covering their losses were rejected.

Discussions about setting up a special travel insurance fund began several years ago in the wake of several bankruptcies in the tour industry. Several hundreds of thousands of euros in state budget funds were used to cover losses incurred by tourists after Fresh Travel, Go Planet Travel and Voyage-Voyage went bankrupt.

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