The September 11th attack
Insurers cut off cruise line customers
By Frank Cho
Advertiser Staff Writer
Citing increased financial volatility in the cruise industry since the Sept. 11 terrorist attacks, several insurance companies have stopped offering travel insurance to passengers on American Classic Voyages cruise ships in Hawai'i and the Mainland.
The insurers are Richmond, Va.-based Access America; Travelex of Omaha, Neb.; Unicard of Overland Park, Kan.; and Travel Guard International of Stevens Point, Wis.
"We are contacting the companies involved in an effort to favorably resolve this issue," said Fran Sevcik, a vice president with American Classic.
Sevcik said several insurers made the decision "unilaterally" without consulting American Classic, and she did not know the reason behind their decision. American Classic, the parent company of Hawai'i's only locally based cruise ships, will still offer travel insurance through its own insurer, she said.
CSA Travel Protection of San Diego is also still selling policies to American Classic customers but has stopped issuing financial-default coverage as part of its policies.
Travel insurance typically protects travelers if they have to cancel their cruise and cannot obtain a full refund, or the company defaults and does not provide the cruise as promised.
For Travel Guard International customers, the decision will not affect policies purchased before Oct. 3, said Dan McGinnity, a spokesman for Travel Guard. But McGinnity said Travel Guard is a privately held company and he declined to comment further about the company's decision.
A spokeswoman for Unicard said the company was told by its underwriters to stop writing insurance policies for American Classic and its Hawai'i and Mainland subsidiaries.
Beth Godlin, senior vice president of travel industry sales and marketing for Access America, said Access America was unwilling to increase its risk by remaining the only major firm providing insurance to American Classic passengers after other leading insurers stopped writing policies. Access America stopped writing policies for American Classic Voyages on Monday.
American Classic Voyages is the parent company of American Hawaii Cruises, Delta Queen Steamboat Company, Delta Queen Coastal Voyages and United States Lines. American Hawaii Cruises operates the 1,200-passenger MS Patriot and the 860-passenger SS Independence, which are both home-ported in Honolulu.
On Tuesday, American Classic cut several 2001 and 2002 voyages out of the company's schedule, and reduced rates for some American Hawaii and United States Line sailings by 50 percent and up to 70 percent for Hawai'i residents.
American Classic has already been facing what some analysts have considered cash-flow problems and the threat of increased competition.
In September the company agreed to pay an extra $38 million to Northrop Grumman/Ingalls Shipbuilding for the two 1,900-passenger vessels that were slated to be delivered in January 2003 and January 2004 after the project fell behind schedule.
American Classic Voyages agreed to buy the ships in 1999 for $440 million apiece. Under the agreement, American Classic Voyages agreed to pay an extra $19 million per ship and agreed to delay the delivery dates for the ships to Feb. 1, 2004, and Feb. 1, 2005.
In the meantime, American Classic will have to fend off a challenge by Norwegian Cruise Line, which will base a 2,200-passenger cruise ship here in December.
