I reread this entire thread just now and saw this qoute by Mr. Petersen:

"We've been working on layering the insurance needs to take the program global but simply hadn't had the time to devote to that as of late. While we'll probably be able to complete all that in the future (sorry i couldn't add the term 'near') my guess is these guys will want a pretty hefty rise in premium costs to us."

He specifically states 'insurance needs', which is not assurance but insurance. Does this mean if this IS an insurance program?

Also, he specifically states that Chapter 11 bankruptcies are not covered - since that is true, isn't the flashing ad on this site misleading when it states 'protect your miles against airline bankruptcy'? I am sure he has paid out the few million in claims as he says, but exactly how many members were insured for Midway Airlines miles, and how many miles at that time were potentially covered? As he says, they first reinsured the original program through underwriters, but since he specifically states that 'the actual coverage is different today', my hunch is that after the Midways collapse, no reinsurer would touch this program again, except at excessively high premiums. If anyone doubts that reinsurers knee-jerk to unusual situations, ask owners of skyscrapers and other potential terrorist targets how much their insurance is going to rise when their old policy is up for renewal. Also, and I'd bet my bottom $200 on this, that Mr. Petersen surely paid out a lot, if not most or all, of those few millions in claims with the underwriter's reinsurance money, not his company's own funds. And remember, that's been over a period of years, not all at once.

I'm also thinking that Mr. Petersen is a pretty smart and ethical businessman, and that smart businessmen do not intentionally start a business likely to fail. THAT means that he's probably 100% certain that there's no way on the planet that a major airline he's covering will be allowed to totally collapse to the ground, either by the government or an assumption by other airlines, and that the frequent flyer programs would be covered somehow, someway. Therefore, his only major concern would be another carrier like Midway, someone operating in an unprofitable niche market that no one else wants, and that no other major airline in the same market would seek it nor the goodwill of the former customers by accepting their frequent flyer miles. Doubtful, too, even in this situation, for gaining the loyalty of those fliers would surely pay off. But assume a smaller carrier does go under - either it won't strain AwardGuard's resources to cover the claims, in which case there's not that many members with a lot of miles in that program, or AwardGuard won't be able to cover all claims, in which case they declare Chapter 11 bankruptcy themselves and you'll form a long, slow line to recover anything from the court. Not because Mr. Petersen would want this to happen, of course, but it is a business and businesses can fail. Contrast that to major insurers, who spread the risk around through reinsrance and have not yet failed. But again, the numer of miles in such a regional carrier and the number of members in AwardGuard with those miles is unlikely to be truly significant.

Someone on this site, please destroy this reasoning, for is this reasoning is correct, why would anyone pay $120 year for anything that not only is likely unnecessary but which is not verifiably financially strong to pay off in the extremely unlikely event of a major collapse or even a minor collapse? You're better off just doing whatever you're doing now with your miles, and put the $120 a year, if you haven't already, into an umbrella house insurance policy that gives you an extra million or two in coverage you'll have much more 'real' coverage and much more 'peace of mind' when you are able to protect your hard-earned assets from ruin if someone steps on a rake in your yard. I view miles as bonuses due to travel, and though I don't want to lose them, I'm not going to toss my money down unless I'm absolutely sure they're covered.

My final thought, if you haven't nodded off by now, is to compare this fuzzy 'peace of mind' state with the fuzzy 'reassurance' that the government is trying to give the flying public with some ill-conceived and meaningless security steps. If on the one hand you're upset about the security efforts underway because they're not meaningful and solid, but on the other hand you see the reassurance of having AwardGuard which may not protect you in the future, aren't you being a little inconsistent?