Desties

Am I the only one who thinks that the DC industry could use a reputable insurance company or two underwriting policies to cover refundable deposits if a club should buckle?

Yes, I'm sure that high-end clients can call up Llloyd's of London and have just about anything insured, but I wonder why there isn't an insurance company actively assessing the risk of every DC, working that actuary table magic, and then drumming up an attractive rate that would guarantee member deposits.

Whether the policy is marketed directly to members or purchased by the club as a whole as a marketing/peace of mind tool, when I see folks here upset about A&K taking the name A&K over the T&H stink or a new forum member go with the screen name "willmyclubmakeit" I realize that this is something that eats away at nearly every active club member.

If the premiums are reasonable, I think a publicized form of DC deposit insurance would be a huge incentive for the industry as a whole, since there are probably countless potential members who are intrigued by the concept but would prefer a little more confidence when it comes to security of the refundable deposit after the failure of T&H.

Does this exist and I'm just missing it?

smtravelor

This would be an excellent idea if it is not cost prohibitive. Does anyone know whether any of the clubs have looked into it?

TarheelTraveler

I agree that deposit insurance is a great idea and would remove a major stumbling block for a lot of prospective members. It seems like it would also speed up the sales process for the DCs. I'm sure a significant portion of the time spent with prospective members involves reassuring them of the security of the deposit. The rest is really an easy sell, particularly for anyone that has experienced a DC trip through a friend for example.

It does seem like Lloyds will insure about anything, but I suspect the rates would be prohibitively expensive particularly for DCs that want a lot of management latitude with respect to what deposits are used for (e.g., if a significant portion is used to fund ongoing operations, marketing or development efforts). I would assume the rate would be lower for some DCs that put the bulk of the funds into real estate, where your primary risk is that real estate values go down (versus management risk). I've seen the Lloyd's questionaires and obviously anything that increases their risk increases your cost.

DC4MS

The safety and security of the membership deposit is the Achilles Heel of the Destination Club industry.

I have spoken to many clubs about this and they all seem interested in offering a product like this as an option to their members, but are not willing to absorb the added cost.

None of the clubs has fast tracked this as a priority and this is something the Destination Club Association (DCA) should really investigate for the benefit of all the clubs.

Once a product is created and then offered (hopefully for a reasonable fee) then there really any downsides to joining ANY Destination Club as your membership fee would be protected.

Unfortunately for the DC industry, the bankruptcy of Tanner & Haley has left a permanent wound that still has not healed. Offering an insurance product or bond would go a long way in easing the concerns of future club members about the safety of their membership deposit.

smtravelor

I have asked Private Escapes about it in the past and I am sure that others have also. Is this something that you can bring up to the DCA as an issue that is important to readers of the forum?

vineyarder

Have they given any indication of what the cost would be? If they are not willing to absorb the cost, they could certainly offer it as an option, just the way some airlines now offer 'trip protection insurance' when you buy a non-refundable fare... Of course, they might not want to do this as it may be seen as going against their assertion that the deposits are safe (i.e. "if its safe, why do I need insurance? They offer insurance, ergo it must not be safe", etc.).

ASIADCMEMBER

the original LRW program had insurance, but if you read between the lines-it was by some new insurance company that did not seem well capitalized.

TarheelTraveler

Interesting, ASIADCMEMBER. Was not aware of that. I assume Quintess looked into continuing that insurance. Was it cost prohibitive? Depending on the cost, it seems like that could ratchet up sales.

ASIADCMEMBER

as the LRW members were absorbed (acquired) by Quintess, I don't have an answer for that question. But the interesting thing was that as a founding charter member of LRW, we took the insurance part to be a "promise" from a big company--Cendant/RCI/Leading Hotels of the World--because they did not have the insurance in place when we paid the initial deposit dues. IT was not only until we got the policy and background that we fell of the chair, "crying or laughing"-I cannot recall--but it was quite painful because after searching google for the name of the insurance company--it had just started with a couple million dollars of capital--not a Llyods or a highly rated insurance company.