I've tried. There is no information forthcoming on AwardGuard's financial resources. It's on a "trust-me" basis. I'll do that when I'm swapping upgrade certificates with FlyerTalkers, but not with my whole life savings of miles.

So..what you're saying...is that you're not going to protect them at all....rather than trust Randy with AwardGuard?? Or do you know of something better?. Seems to me...you would want to at least have a chance at protection....for a measly $200.

I'd consider carefully the cautions that some have stated or implied, especially in the absence of the financial resources information that has apparently not been forthcoming. It's one thing for an "assurer" to cover the FF losses for relatively tiny operation such as Midway or Legend. It would be a very, very different situation to cover the FF claims for a UA or AA or DL, or perhaps even a mid-level player such as US or NW.

I have purchased AwardGuard to protect my miles for about 6 years. I did so mainly because I had a lot of TWA miles and knew they were facing financial difficulties. Also I knew that the number of TWA miles protected by AwardGuard would be small, as compared to American, United, Delta, etc. and, therefore, AwardGuard may be able to protect these miles.

However, I was never real comfortable that AwardGuard had the financial resources to really protect my miles completely. I, also, was never able to find a financial accounting of the assets to back possible claims. (If a major Insurance company was backing the plan, I would have felt much better about it.)

When AA took over TWA, I decided to drop the coverage because: 1) AA (and other carriers I use often) are more stable than TWA was and 2) if one of the biggies defaults on its FF program, I do not see how AwardGuard would have the assets to make payouts. I imagine it would be a "rush" to cash in ASAP for all covered members and become a frenzy.

Perhaps others or Randy can provide more info on the "backing" of this program - but I have been unable to find it.

Unfortunately I fall into the same boat as others - unwilling to spend a 'measly' $200 and to just 'trust' someone I do not personally know, though I hasten to add with all due speed that Randy has given no one cause for distrust!!! The point being made is that, if you do not know the financial ability of AwardGuard to be able to deal with a major airline going under, and yet you pony that 'measly' $200 up, it's not just that $200 you'd be out - you'd also be out the MILES that you were counting on to be protected. I think this program is innovative, but so did people who bought into the concept of CyberRebate.com with 100% returns on purchases, and that company never made their financial information available at any time. I am only saying this because with any insurance program, it is crucial to the purchaser to be sure the insurer, through protected assets or reinsurance, actually will be able to pay off claims made.

Having said this, I wish there was a way to know for certain of the viability of this program as I would be tempted to join, though only with an option to purchase the amount of coverage I needed. Something odd, though, not with AwardGuard but the concept - it seems to be that the conditions for actually making a claim will be almost non-existent, for an airline of any size to just cease operations without bankruptcy proceedings and being absorbed into another airline even now is very slim. Having said that, one wonders if that were true then why haven't major insurers like State Farm and the like offered programs like this? You'd think they'd be fat cash cows, much like a lot of those warranties that Best Buy and others offer any time you buy anything larger than a thimble.

I assume AwardGuard is held by a company and it must be privately held, so profit margins would be difficult to determine. I assume the existence of this Website is directly linked to marketing the program, though I certainly have no complaints with that or this site. I would have to also agree with another opinion expressed, but in a different way - I think there wouldn't be very much cost involved in offering coverage per 100K miles and simply allowing people to purchase what they need and then add on later. For instance, I have around 400K miles total - why should the guy with 100K or 2 million miles pay the same price, when in one case one gets 1/4 the benefits and the other guy gets 5 times the benefits, all for the same price. I am cudgeling my brain but fail to see how offering flexibility to purchase block coverage like this would detriment AwardGuard - unless, perhaps, that people would not have to pay as much to get the coverage they want. Supply and demand at work - if Randy's program is the only one offering the coverage, it's not as if you have a choice if you want insurance - you pay the price. Considering that there's a lot of money in the pockets of those who frequent the site, probably not a lot of thought is given to $200, and it seems to me to be smart marketing on Randy's part to charge just one price, because why offer choice when no competition exists? There is nothing wrong with this at all - he thought up the concept, he put it together, he markets it - he doesn't force anyone to buy it nor blankets my mailbox with solicitations - and some of the profits surely help to keep this site going, right?

With all that said, I'll keep my $200 until I have reasonable knowledge of AwardGuard's financial stability to pay off in the event of a major airline going under, since that's all I fly. I'd also like to know (and it's probably somewhere on this site) exactly how many current paid members there are in this program? Final point - assume a major airline does go out of business and AwardGuard does cover the miles - don't you think Randy would have to drastically increase the cost of future memberships if he wanted to continue in business, o the point where no one would want it? And if he didn't or couldn't continue in the business, all of the rest of the members who have miles covered under airlines other than the dead one will be out of luck and out of their membership fee, even if Randy had the best of intentions, he could still be forced into bankruptcy himself.

Sorry, thought to mske a few more points. First - who is the state or federal agency that regulates AwardGuard? Since they are in the insurance business, they must be regulated - are they? Secondly, I thought insurance programs HAD to furnish proof of ability to cover claims and/or financial background - shouldn't that agency have it? I would first find out which agency has knowledge of and responsibility for AwardGuard before proceeding further. That's only prudent.

Another thought - people who have 'peace of mind' under this program may choose to allow lots of miles to pile up in their account on one airline, seemingly secure with the coverage - a behavior they might adopt BECAUSE of the insurance, not the other way around. That to me would be the true cost of a potential failure of AwardGuard to protect the miles - you could have used those miles instead of saving them based on thinking they were safe.

So the true cost of that measly $200 could be a lot more than you think.

You'd be "out" the miles you were counting on being protected...you said this....well....you'd be out of them anyway if you didn't pony up the measly $200... unless you have some other way of protection. Most people on this board have status with certain airlines...and I don't think you'd see much of what you were speaking of....people deliberately piling up miles on one carrier.
The only point I still make is...would you be better off paying the measly $200 and have a CHANCE at being protected....or leave it alone and definitely NOT be protected. Assuming you have a good amount of miles...the choice is obvious...pay the $200.
If you find other coverage somewhere then this negates everything I just wrote.
I realize that you see no financial backing....no statements...all that stuff...but if there is no other alternative..at least you have a fighting chance.

I understand your point, but I'd rather not pay the money with no knowledge and no real guarantee that my miles would be covered. To pay money to someone for which you may or may not get coverage is like paying for magic beans that may or may not grow a beanstalk. Perhaps I am wrong - there's a lot of smart business people on this site - is popping out a couple of hundred dollars for something with no known guarantee a smart business decision?

Which raises yet another interesting point - this uncertainty would not exist if Mr. Peterson would answer these questions, and if he will not, why do you think it wise to buy into such a program? Just on the HOPE that it will work? Would anyone advise their college-age kids to enter into financial transactions without looking first?? I'm simply saying that, hey maybe the reason no one else offers this kind of insurance is because those companies know that they could not afford to pay off if a major airline went down, otherwise they'd been all over this faster than crap through a goose, and maybe no reinsurer would touch something like this. Just because there is no competitor doesn't mean you cannot choose otherwise, to not insure the miles.

Mr. Peterson being an honest businessman should have no complaints about the questions being raised and should be able to answer at least two - what specific agency regulates the insurance offered by AirGuard and how can a potential purchaser verify AirGuard's financial viability in the event of the failure of a major carrier? If these answers are not forthcoming, then indeed you would be right - hope would be all you have left that your miles are protected.

Note that nowhere on the AwardGuard website http://www.privilegeflyer.com/awardguard/ is the word "insurance" used - it's called a benefit, which may take it out of the realm of regulation.

Also, remember Randy's statement:

"When we first put the program together, we actually underwrote the first insurance in the Lloyd's insurance market in London with some seasoned insurance executives putting together the layers of insurance needed for such a program. That was quite interesting though the actual coverage is different today." That last sentence may be a subtle way of saying that there is no underwriter for the current coverage - especially since it's not "insurance".

If you're looking for financials, I don't think there's much chance. AG is part of PrivilegeFlyer, which looks like it's owned by Frequent Flyer Services, a privately held company. http://www.frequentflyerservices.com/whoweare.shtml

Also, on the AG website, it states that "Claims for all programs which cease operation during the same membership year will be applied towards one $7,500 aggregate award liability." Yes, Randy states that they're still paying out claims on Midway, but I wonder if the $7,500 aggregate liability per program was instituted after the Midway collapse. The $7,500 limit may be why AG goes with a flat fee instead of a mileage-based fee.

So if you happen to be sitting with a million+ miles in an FF account, a $7,500 limit won't give you a lot of protection, especially if you use them for upgrades.

Terrific points, especially concerning that you are probably not buying 'insurance' per se, that therefore it's not regulated and there's no guarantee of anything - at least as far as is known. And the point of the $7,500 limit should also give cause for concern.

So it comes down to a simple matter of personal choice - if you want to spend the $200 for 'peace of mind', you can afford to do so, and you realize all of the above, go ahead and do so. It's your right to make choices, thankg goodness, but for those getting a little peeved with this issue having been brought up, remember that there are valid reasons out there and no one's intent here is to unfairly slam anybody - just point out cautions to those who are asking questions.

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?

Please KC...you are thinking wayyy to much....get some rest... .

As airlines tip toward insolvency, I am planning on liquidating the remaining miles in each individual account through a broker before rigor mortis sets in. Sure, it's risky, but if I had XXX,000 miles on America West I'd be a little worried right now...

What's the value of an Ansett Airlines mile?

That what worries me. Correct me if I'm wrong, but isn't think blatent false advertising?

What's the point then? When did an airline they cover go completely out of business? Once? Over ten years ago? Sheesh... Bankruptcy protetion can keep a company alive for years.

Oh well, whatever floats your boat.

Flip




[This message has been edited by flipside (edited 11-19-2001).]

I am still confused about the coverage limit : is it $7500 per year of redemptions or $7500 per year in which the airlines went under ?

For example, if I have all my 2 million miles in airline X, and airline X goes under in 2002, can I redeem tickets worth $7500 each year I continue my membership until my 2 million miles are exhausted, OR am I limited to a total of $7500 corresponding to the single year 2002 in which the airline X went under ?

The description on the Web are not clear regarding this point.

[This message has been edited by ananthar (edited 02-03-2002).]