Travel Insurance Fund
About the fund
The Travel Insurance Fund is a non-profit organization operating according to Act no 95/2018 on package travel and linked travel arrangements, and regulation no. 812/2021.
The function of the fund is to insure the interests of Travellers who have purchased a package tour or linked travel arrangement which is not performed in accordance with contract as a result of insolvency or bankruptcy or the trader.
The Minister of Culture and Business Affairs appoints a three member board of directors for two years at a time. The current board members are: Andri Björgvin Arnþórsson appointed without nomination, Jóhann Tómas Sigurðsson nominated by the Consumers‘Association of Iceland, and Rannveig Grétarsdóttir nominated by the Icelandic Travel Industry Association.
The board of directors shall ensure that the Fund is at all times capable of performing its function. The board decides on the amount of annual premium and on borrowings.
Legal framework
- Act on package travel and linked travel arrangements no. 95/2018
- Regulation no. 812/2012 on the Travel Insurance Fund
- Also refer to Act no. 96/2018 on the Icelandic Tourist Board.
The Act on package travel and linked travel arrangements is based on EU Directive no. 2015/2302 on package travel and linked travel arrangements. The aim of the legislation is consumer protection, and it stipulates several important consumer rights regarding the purchase of package travel including protection in the case of insolvency or bankruptcy of the organizer.
Membership
According to Act 96/2018 on the Icelandic Tourist Board all traders offering package travel and linked travel arrangements must hold a licence from the Icelandic Tourist Board and be members of the Travel Insurance Fund.
Payments from the fund
The Travel Insurance Fund reimburses all payments travellers have made for package travel or linked travel arrangements that are not performed according to contract as the result of insolvency or bankruptcy of a trader or a trader’s licence being revoked as the result of failure to fulfil legal duties. Payments are fully refunded regardless of the security amount provided by the trader in question. If carriage of passengers is included in the package travel contract the Travel Insurance Fund will provide repatriation. If a tour is in progress travellers shall be, to the extent possible, allowed to complete the package travel in accordance with the original contract. I
n the event of the bankruptcy of a trader a claim held by the Fund will rank in accordance with paragraph 1 of Article 112 of the Act on bankruptcy etc. No. 21/1995 in the course of the bankruptcy proceedings.
Assets of the Travel Insurance Fund
The total assets of the Travel Insurance Fund shall amount to a minimum of ISK 100 million. If the total assets of the Fund are below the minimum the board of directors of the Fund is permitted to increase the premiums paid by members of the Fund until the Fund has reached its minimum size or until obligations of the Fund are fully paid.
The Travel Insurance Fund is required to invest its funds to enable optimal performance by the Fund of its function. The Fund is permitted to invest its funds only in deposit accounts with a commercial bank, or with the Central Bank of Iceland, or in liquid transferable financial instruments secured by a guarantee of the State Treasury.
The fund's operating costs consist of the board's salary and salary-related payments, accounting costs, and the cost of the fund's investment at Arionbank.
Year-end financial statements
Premiums
Members of the fund pay an annual premium to the fund. The amount of the premium may be determined in the range of 2.5-10% of the amount of the security provided.
The board of directors determines the percentage of the premium annually, the decision must be made before July 1st. Premiums are due September 1st each year. Paid premiums are added to the fund´s capital and are non-refundable.
Base charge
New members to the fund pay a base charge. The base charge is paid for five consecutive years after membership has been approved.
Paid base charges are added to the fund´s capital and are non-refundable.
Securities
The sale of package travel and/or linked travel arrangements is subject to package travel security. Members of the Travel Insurance Fund must provide a security according to the decision of the Icelandic Tourist Board. Then determining the security, the trader’s financial situation and operational risks must be considered.