As a travel provider, you have a range of legal and commercial obligations to meet. Satisfying merchant acquirers. Protecting customer funds against insolvency. Demonstrating financial resilience to partners and suppliers.
Then there's the unique nature of travel: Your customers pay you months before they travel, and, depending on the type of travel business, the services they pay for are delivered by a third party. A lot can happen in that long lead window. An airline could fail, or a vital supplier could become insolvent. When that happens, it's up to you to deliver the service.
Travel-specific insurance offerings like financial failure insurance, supplier failure insurance, scheduled airline failure insurance (and more) give you the peace of mind you need to operate a successful travel business.
In this guide, we explore:
How the travel sector operates means travel businesses tend to have a unique risk profile due to the following characteristics:
In many sectors, payment and delivery happen close together. This isn't the case in travel. A traveller books and pays for a holiday in January, which won't happen until July. That gap creates forward booking exposure. The longer the lead time, the greater the window of exposure.
The organiser's legal obligations rest on suppliers delivering on their promises. Unfortunately, one supplier failure can cascade into hundreds or thousands of refund demands, emergency rebookings and reputational damage. Take the airport transfer provider Resorthoppa. When they collapsed in March 2025, they owed £8.2 million to creditors (including 18 destination transport providers) but had only £343,000 in assets.
Selling packages without the necessary financial protection is a criminal offence under UK law. Non-compliance can lead to criminal penalties, including steep fines with no maximum.
Payment processors and card acquirers are wary of the travel industry and label it as ‘high-risk’. If a processor decides a travel business is too much of a risk due to insolvencies and high chargeback ratios, they may freeze travel providers' funds, cap processing volumes or outright refuse to provide merchant services at short notice.
A travel business that can demonstrate robust protection, including financial failure, supplier failure, scheduled airline failure and pipeline funds insurance, presents as having a lower risk profile. This can mean faster merchant account approval, lower rolling reserve requirements, higher processing thresholds and reduced risk of account freezes.
Any travel business selling packages in the UK must comply with the 2018 Package Travel and Linked Travel Arrangements Regulations (PTRs).
The regulations hold the travel organiser accountable for service delivery—they are legally responsible for the performance of every element of the package, even where third-party suppliers deliver those services. The PTRs also require organisers to have effective insolvency protection in place before taking any customer money.
That protection must satisfy specific conditions. For example, where insolvency affects a package that includes transport, it must cover the cost of repatriating travellers at no charge. Refunds for undelivered services must be issued promptly, and the protection applies to all travellers, regardless of where they live, depart from or where the package was purchased.
For non-flight packages, the 2018 PTRs provide three approved financial protection options:
It's important to note that these methods can be combined under Regulation 24, for example, using a trust account alongside insurance. For flight-inclusive packages, an ATOL licence adds a further layer of protection.
Last year, the UK government ran a consultation to update the PTRs framework, and its response confirmed widespread support for maintaining the existing consumer protection structure of the legislation. Respondents were clear that consumer confidence in package holidays is directly supported by these regulations. Trust providers supported the proposal to allow organisers to combine trust protection with bonding, not just insurance. However, respondents raised concerns that increased flexibility without additional reforms (such as clearer trust account rules, enhanced insurance obligations and stronger oversight) could weaken consumer protection.
It's worth noting that the government announced its plans to remove ‘Type B’ linked travel arrangements, the category where a trader facilitates the booking of a second service from another trader within 24 hours. This will significantly narrow the scope of what qualifies as a linked arrangement with two main consequences for travel providers and consumers: simplifying compliance for some businesses and removing a layer of consumer protection for certain booking patterns.
The travel insurance market offers a host of specialist products, each designed to cover a different point of failure in the travel value chain. Understanding what each does is essential to building a protection structure that actually works.
Financial failure insurance is vital protection for most travel organisers—it protects customers against financial loss when a travel company they've purchased a service from becomes insolvent or ceases trading. The insurance reimburses customers' payments, meaning they aren’t out of pocket if the travel business collapses.
The Package Travel Regulations (PTRs) require that UK travel companies provide financial protection for customer bookings. FFI is one of the methods they can use to meet this requirement. FFI is also one of several financial protection methods required for membership of prominent travel associations, such as the Association of British Travel Agents (ABTA).
Any business acting as a package organiser, including but not limited to tour operators, coach tour operators, travel agents, OTAs, cruise operators, homeworking groups and travel technology platforms that create or facilitate packages.
Learn more about this insurance type by reading our article exploring what financial failure insurance is and why your travel business needs it.
Where FFI protects the consumer, supplier failure insurance protects the business itself. When a supplier collapses, the organiser is legally responsible for delivering the holiday or issuing a full refund. Without SFI, those costs come straight off the bottom line.
Most travel businesses work with dozens or hundreds of suppliers across multiple countries. Deep financial due diligence on every single one is unrealistic, and even well-capitalised suppliers can fail without warning. SFI gives the organiser room to absorb those shocks without causing an immediate and crippling cash crisis.
Supplier failure insurance is relevant across the travel sector. Tour operators benefit from SFI because it absorbs the financial shock of a supplier collapse before it destabilises the wider business.
Travel agencies and OTAs face a similar exposure: as the customer-facing party in the booking, they carry the obligation to refund or rebook when a supplier can't deliver, and SFI ensures they have the financial headroom to do so without draining working capital.
Learn more about this insurance type by reading our article exploring what supplier failure insurance is and how it works.
Airlines sit in a uniquely precarious position in the travel supply chain. They are capital-intensive, margin-thin and highly sensitive to fuel costs, currency movements and geopolitical events.
When an airline collapses, the knock-on effect on travel organisers who have sold packages that include those flights is immediate and often severe. Scheduled airline failure insurance (SAFI) softens the blow for travel companies reliant on airlines.
SAFI covers financial losses resulting from airline insolvency. That typically includes:
Like SFI, it does not satisfy PTR obligations on its own. Think of it as a commercial mechanism that covers what you spend while meeting your legal responsibilities to customers.
Any business that intermediates the sale of flights faces significant exposure when an airline goes under, because the liability to the customer rests with the organiser. SAFI is essential for any organiser selling air-inclusive products.
Learn more about this insurance type by reading our article exploring what scheduled airline failure insurance is and how it works.
This is one of the travel industry's more overlooked risks: an intermediary in the payment chain takes payment from a customer and then fails before passing those funds on to the operator or supplier.
Holiday payments often pass through several intermediaries, such as payment processors, merchant acquirers or booking agents, before reaching the organiser. That delay creates significant exposure, because the organiser remains obligated to provide the service regardless of whether the money has arrived.
Pipeline funds insurance covers the payment an operator or supplier expects to receive from someone earlier in the value chain, but which never materialises because the intermediary has ceased trading.
Like SFI and SAFI, this is a commercial policy rather than a regulatory compliance tool. But it can be the difference between having the liquidity to honour your commitments and being left out of pocket at the wrong moment.
It is particularly relevant for OTAs, travel technology platforms and travel-tech businesses processing high volumes through complex payment architectures where funds pass through multiple hands before settlement.
Learn more about this insurance type by reading our article exploring what pipeline funds insurance is and how it works.
Financial failure, supplier failure, scheduled airline failure and pipeline funds insurance aren't always enough on their own. The travel industry is inherently varied, and some operators have models or growth ambitions that call for something built specifically for their circumstances.
A cruise operator managing advance bookings and global supplier arrangements has a different risk profile from a travel technology platform processing bookings and payments on behalf of multiple third-party operators.
The way core products are combined, sized and supplemented needs to reflect the specifics of the business, rather than adhering to a standard template.
Taking out a bespoke insurance policy begins with a detailed assessment of how the business actually operates. This involves examining the entire value chain, including:
The result may involve combining core products in a non-standard way, including:
If your travel business has a complex supply chain, operates across multiple jurisdictions and intends to scale rapidly into new markets, bespoke insurance might be the best route to ensure full risk coverage. It essentially reflects where your business is heading, not just where it's been.
A specialist advisor with extensive experience in the travel trade can help you decide whether bespoke insurance makes sense for your business.
TMU Management works with travel businesses, offering insurance solutions that match how companies actually operate. From financial failure insurance and supplier failure cover to SAFI, pipeline funds protection and bespoke insurance policies, every solution we offer is built around the client's specific model, risk exposure and regulatory obligations.
Rather than offering off-the-shelf policies, we take a holistic view of each business, mapping exposure across the whole value chain to identify vulnerabilities that might not be immediately obvious, and designing protection that supports compliance, strengthens relationships with merchant acquirers and provides the financial resilience needed to grow with confidence.
Find out how TMU Management can support your travel business with specialist insurance solutions. Contact our friendly team today to see how we can help you grow.
If you need insurance that reflects how your business really works, TMU Management is here to help. Our team will assess your challenges, understand your exposures and design a bespoke solution that fits your strategy.
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