A traveller who was scammed by a fraudulent online travel agent will not be reimbursed by his insurer after it showed its policy did not respond to his loss.

The complainant was supposed to stay at a resort that had supposedly been booked for him by the agent, but upon arriving overseas, he was asked to pay more to confirm his reservation. 

After contacting the resort directly, the man discovered that no booking had been made under his name and that the resort had not received any payment. 

He says the travel agent had suggested it was a registered tourism operator, but local authorities later confirmed the agent did not exist.  

The policyholder was unable to recover the funds and lodged a claim with Tokio Marine & Nichido Fire Insurance for compensation. 

The insurer explained that its policy did not respond to losses caused by “errors, omissions in any booking arrangements”.  

In a dispute ruling, the Australian Financial Complaints Authority acknowledged the agent “appeared genuine” and that there was no reasonable way that the scam could have been foreseen.  

However, the authority says this was not relevant to the policy exclusion, as it applied “simply for errors and makes no reference to the circumstances leading to that error”. 

“In my view, the act of making payment to an illegitimate travel agent, in the belief the agent was legitimate, constitutes an error,” AFCA said.

“That error was made in relation booking arrangements, so it falls within the scope of the exclusion.

“While the booking appeared legitimate, the policy does not operate in a manner that provides broad protection against scams and fraudulent individuals. No booking arrangement was created with the accommodation provider, and the loss is a result of this failed booking arrangement.”

See the ruling here.