'We Attempt To Save the Day:' One-on-One with John Noel

by Brian Major
Last updated: 6:53 PM ET, Thu May 22, 2014

John Noel is a travel insurance executive and travel agency owner whose name has become legendary in the business due to his willingness to leverage his experience as a travel agency owner and manager to provide agencies with insurance products that protect them from an array of potential risks. Noel is probably best known for his 1985 launch of Travel Guard International, which emerged as a leading travel insurance provider before Noel sold it to AIG in 2006. He later formed The Noel Group, which includes Insure America, which provides travel agencies with services that help them maintain strong relationships with clients. In January, Berkshire Hathaway Specialty Insurance signed an agreement to purchase the assets of MyAssist and Insure America. Noel continues to oversee the companies from his headquarters in Stevens Point, Wisconsin. We spoke with John about Insure America's errors and omissions coverage from travel agencies. TravelPulse: What led you to develop errors and omissions ("E&O") coverage for travel agencies? John Noel: I bought several travel agencies around 1985 and became a travel agency consultant based on my experience in training. The agents I was working with really needed expertise in helping people with travel problems. We also realized there was a need to persuade agents of the value of E&O insurance. So in the 1990s we started selling E&O coverage and we have been very successful doing so. We have focused for the last few years on the small and mid-sized agencies primarily because they need the help. TP: What convinced you of the importance of E&O coverage? JN: In the late 1990s I literally moved into an agency located in Stevens Point for six months and worked as a travel agency manager. You really got a sense of what goes on in agencies. I was sitting in my office and watching an agent working with a customer. The client had a baby who was running around and travel agent gave the baby a piece of candy. The baby ingests it and starts choking. The agent and the mother start screaming. I ran out and grabbed the baby, turned it upside down and popped it in the back of the chest and the piece of candy flew out and ricocheted off the desk. Where would we had been had something serious happened? Would that agent have been liable? Of course. So it could have been a death claim which in today's litigious environment would have been hundreds of thousands of dollars. I wasn't in the sale of E&O insurance at the time but very soon after got into it and became kind of an advisor to travel agents. TP: You mentioned that the small errors that can happen to agencies, such as printing the wrong time on ticket documents, can ruin travel arrangements and open owners to claims from disgruntled clients. How does E&O provide protection from such circumstances? JN: Let's take a situation where a small one-person or two-person travel agency has been in business three or four years. They have a personal savings account with $15,000, a condo and $15,000 in equity and they have a car with payments. The agency then faces a situation where it is threatened with a lawsuit if they don't fix their clients' problems, for example travel arrangements ruined by small errors. If they didn't have E&O insurance, they are going to be reluctant to settle a claim for $30,000 because they don't have it. There would be a lawsuit and eventually a judgment, and let's say the judge renders a $50,000 judgment against the travel agent. Small travel agencies don't have the resources to survive this. Let's say it's a death claim of hundreds of thousands of dollars. Well there is no way a travel agency can settle anything like that. We attempt to save the day for that travel agent so that instead of them being angry, they client is saying 'That was really terrific.' TP: Can you give an example of how small errors can harm an agency's business? JN: In 1988, the University of Wisconsin-Madison went to the Rose Bowl. The travel agency I owned booked 200 individuals on a charter flight to Los Angeles and purchased the tickets from a fly-by-night ticket broker, which was our mistake. On New Year's Eve I got a phone call while eating with my six kids, and the caller said 'John, I have 200 people including a state Supreme Court justice, doctors and lawyers, and I have no tickets to the Rose Bowl.' The only way to get tickets was to purchase them on the street from ticket brokers for $900 each. I did not have E&O. So what do you do? In my savings account I had $230,000. So I withdrew $210,000 of my life's savings, and our guy spent all of it to get everyone tickets to the game. I was a hero but I didn't have any money left.

[BLURB] On New Year's Eve I got a phone call while eating with my six kids, and the caller said 'John, I have 200 people including a state Supreme Court justice, doctors and lawyers, and I have no tickets to the Rose Bowl. The only way to get tickets was to purchase them on the street from ticket brokers for $900 each. I did not have E&O. So what do you do? In my savings account I had $230,000. So I withdrew $210,000 of my life's savings, and our guy spent all of it to get everyone tickets to the game. I was a hero but I didn't have any money left.[/BLURB]

[/CALLOUT] Luckily I was the kind of travel agency owner and manager who believed in coming through on the promises I made. The integrity we had as a company paid off ten-fold after that with all of those every important people who were on the trip. They all talked about what a great company we were. It had helped us. But if I had had E&O insurance from Insure America, I'd have felt a lot better. TP: You've said that in addition to providing financial coverage for agencies, your E&O coverage incorporates your Booking Protector tool, which provides key services as well. Can you explain how that works? JN: We merge the goals of travel agency and the insurance company into one and we speak for both. When you do that you have a win-win situation. Even if the problem is not covered, if we can provide some element of help and service to the travel agency, we do it. The important times are when they need a claim settled, but can also be a time when they just need advice. That's what the Booking Protector is all about - when they find themselves in difficult situations where they want to throw their hand up, they can call Insure America. TP: How much does this sort of coverage cost? JN: For agencies, the premium will be $300 to $350. That is nothing compared to the potential losses from a lawsuit. So those travel agents that have good business plans and have learned something about being a professional are buying E&O insurance. Our job is to educate all travel agents about the importance of buying E&O coverage so they don't wind up in a Rose Bowl fiasco like I did. We do business with large agencies as well as small. But we find out Booking Protector, and our advice and the guardianship we provide are exceptionally beneficial to smaller agencies. TP: Many smaller and mid-sized agencies are affiliated with host organizations. Do these groups traditionally offer E&O coverage? JN: Some host agencies offers plans, some do not. Some offer plans that have aggregate limits, some do not. It's important for the travel agency and the organization, association or individual LLC that's providing that kind of coverage to make sure they are doing it in the best interests of the travel agents. So there is a bit of investigation that needs to go on when it comes to the travel agent purchasing E&O insurance to make sure they have adequate coverage. I can honestly say there is no other company that offers Booking Protector and in our opinion that is one of the most important elements of our product. That is not an insured benefit, it is a service.