TICO Says Deloitte Study Reveals Compensation Fund Vulnerability
Bruce Parkinson, Open Jaw
An analysis and financial assessment of Ontario’s travel industry compensation fund concludes that current funding arrangements combined with expected losses will deplete the fund over the next 10-15 years.
Ontario travel industry regulator TICO engaged Deloitte to complete an actuary analysis and assessment of the industry financed Compensation Fund. The purpose of this study was to determine the adequacy of the fund under various scenarios of expected losses, and to assess the sustainability of the fund into the future.
Significant conclusions of the report include:
Current funding arrangements combined with expected losses are projected to deplete the fund over the next 10-15 years;
Significant risk exists with the dependency on charge-back policies of credit card processors, leaving the fund and consumers at risk if these policies change in the future;
The optimal approach to achieve the desired target fund levels is a new funding model that includes a variable consumer protection fee;
The report suggests target fund level of $50 million and the introduction of a comprehensive reinsurance layer to protect consumers from catastrophic losses.
TICO says the findings of this report were integral to the recommendations it made during the comprehensive review of the Travel Industry Act, 2002 and Ontario Regulation 26/05.
An observer and analyst of the Canadian and international travel industries for over 25 years, Bruce uses the pre-dawn hours to prepare a daily news and information package to keep industry members up to date.