AwardGuard?
 

In light of all the talk about possible airline bankruptcies, I am starting to considering purchasing AwardGuard? Does anyone have any experience with that product?

No experience to offer, but I am considering purchasing AwardGuard too. Not clear how I can protect over 2 million miles.

How much coverage can this company provide? Depth of finances? If allthe airlines take the type of serious hits that are possible, and all programs dry up, what happens if Awardguard runs out of money?

http://www.privilegeflyer.com/

Presumably this is the only program of its kind?

I was surprised to see that the website seems to not mention 9/11/2001 or its effects on its business in any way. In fact, the website, as far as I can tell, might not have been updated for years, which is worrisone to me. I also couldn't find any information on the company's financial or organizational data, whether it was publicly traded, or regulated as a bona fide insurance company.

The homepage starts off with a message from president Randy Petersen. Is this the same Randy as "our" Randy?

after checking around, the website is registered to the same people running flyertalk.com, so I presume it's the same Randy Petersen... Maybe we should post this thread over in his forum and see what he has to say about the program?

It's the same Randy and the program has been around for about 10 years, maybe longer.

TW

We're the same. Here's a little background. The program was first introduced back in 1991 when the industry was where it seems to be heading now. So we are over 10 years old. In fact, USA Today even named the AwardGuard program one of the top new business ideas in 1991. The idea was based on our concern that many frequent flyers were willing to change choices of airlines to the financially stronger ones only because they were worried about their frequent flyer miles being lost. We are still paying claims on members of the original Midway Airlines frequent flyer program which went out in 1991 and over 700,000 members lost all their awards (except those that had AwardGuard). Through the years we've covered tens of thousands of members of programs, including expiring miles from 1991 as well. As for changing things on the Web site, we still operate AwardGuard but don't often change things or put it in your face for one very good reason - you'll not accuse us of trying to take advantage of the situation. Word will get around and we'll mention it when appropriate, but you won't see any full-page ads for the product in USA Today or The Wall Street Journal telling you that the end is near. As for the finances and who we are, well, you can search all you want and not find anyone who had had a bad experience with us. You can check legal records against AwardGuard and find that no member has ever sued us because we didn't deliver (remember, we have covered expiring miles for American and United and others all throughout the 90s) and we've paid hundreds of thousands, if not a few million dollars in claims....and we're still here. Understand this. I can't tell you if the product is right for you. It was designed to provide peace of mind for members of programs and to allow them continued support of their favorite frequent flyer program, regardless of it's financial problems. After all, this is when airline need you the most. Over the years we provided a great deal of peace of mind for members of Canadian and TWA programs as they battled the ongoing up and down financial conditions of the industry as well as other airline programs. This time it looks worse. Your call.

Questions?

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.

[This message has been edited by Randy Petersen (edited 09-17-2001).]

Wow, even Randy has problems with duplicate postings....

Randy,

Can you please answer a question on AwardGuard then? (I've sent an e-mail but have not received a reply.)

Does the AG protect all my mileage-type accounts, or just one specific one?
What about family members? Is there a cap to either the number of accounts or number of miles?

Thanks.

also, is it even possible to sign up for it now? or were new customers cut off after 9/11?

is it like trying to get life insurance after you have cancer?

ChaseTheMiles and others. Let me try to answer your questions, though any email sent over the wekend will likely be answered today (Monday). First of all, AwardGuard is still open for business and we have decided not to introduce new date of enrollment restrictions given the news over the weekend.

QUESTION: Does the AG protect all my mileage-type accounts, or just one specific one?
ANSWER: We protect all major frequent flyer and stayer programs such as those offered by Continental, American, Alaska, America West, etc. The one enrollment fee covers your liability across all these memberships - you don't need a membership for each program.


QUESTION: What about family members?
ANSWER: There is a family plan available and full details are available on the Web site listed below. The cost of the family plan is determined by the program you choose since you could also add AwardExtender to your choices. (the only reason I can't give you a definitive price)

QUESTION: Is there a cap to either the number of accounts or number of miles?
ANSWER: No cap on the number of programs covered per membership to the extent of those listed in our materials (it doesn't matter if you belong to 2 or 12 programs) and we don't have an actual cap to the number of miles we can protect for you (some members have millions and with the Midway program, while their award structure was not mileage-based, some members did have covereage equal to about 900,000 miles, which why some 10 years later they are still enjoying their awards courtesy of AwardGuard). The restriction is based on payout per year. For instance, new members can't have claims equal to more than $7.500 in a given year PER program. The reality is that most people may redeem 2-4 rewards a year and most don't exceed that cost. The cost being the claim to supply substitution of awards via a purchased airline ticket.

Hope this helps, the Web site for AwardGuard is:
www.privilegeflyer.com

Thank you Randy. Count me in. The peace of mind alone is worth the $119 annually. The cap of $7500 per program per year may preclude redemption of more than one international business or first class ticket at a time but I can live with that.

Just got off the phone with a friendly CSR at PrivelegeFlyer. No hold time, phone was answered by a person. And it's great to have the company president here too.

Here are the caveat-emptor questions I asked and the answers I got.

I asked exactly when coverage would begin for a new subscriber, the answer was 12:01am the night of your signing up.

I asked what the rationale was for charging a flat annual fee per person irrespective of the number of miles being insured (i.e. someone with 100,000 miles in jeopardy pays the same annual premium as one with 5 million): the answer was that it would be too difficult to keep track of everyone's mileage accounts, which of course fluctuate.

I asked how "family" is defined for the purposes of the discounted annual fee; the answer was any person whose frequent flier statements come to the same address as the primary policyholder.

She wanted to make it clear to me that the AwardGuard program's payout happens only when an airline goes completely out of business (Chapter 11 doesn't count). This is consistent with what is stated on the website. I asked what would happen if an airline were to suspend its frequent flyer program, but not go bankrupt. The answer was that coverage would not apply to this situation.

Despite only having 250K+ miles in the bank, I am leaning towards signing up. However, there are a couple of things that bother me a bit.

First, when one buys life insurance, car insurance, homeowners' insurance, etc., the premium paid is proportional to the maximum possible benefit. This is simple fairness. Following the example of term life insurance policies, would it not be more equitable to charge a premium of $x per 100,000 miles per year? In other words, someone with 2 million in the bank could feel free to take out a policy that only protects 100,000 miles, 1 million miles, or all 2 million, and pay a correspondingly scaled premium.
It would be easy to structure the rules to prevent someone from taking out more coverage the years after their program went broke.
The fee structure as it stands now appears to subsidize the accounts of the super-mile-rich at the expense of those of us with more meager balances. On FlyerTalk this is probably a welcome feature http://www.flyertalk.com/forum/smile.gif but I'm going to complain for the little guy here. And if I am missing something here I'd be glad to know. Clearly the program as it stands now makes for simpler billing and my guess is that this wins out over idealistic egalitarianism.

Second, and this one is much more far-fetched, but say for the sake of argument that one or more of the major US airlines go out of business (heaven forbid). What would stop them from declaring the FF program null and void the day before liquidating? Doing so would seem to make no difference from the airline's point of view; however, whatever insurance company is underwriting AwardGuard would have a presumably significant financial incentive to persuade the airline in question to do just this. Yes, it would be a dirty trick indeed to use this loophole in this manner. Hopefully unlawful too. And probably very unlikely. Even if this scenario were to never occur, the "discontinued FF program" loophole does make the decision of whether to spring for it a little tougher for me.

Despite these minor gripes, the concept behind this is very innovative, the company seems to be well staffed and well regarded by those who have benefitted from it, and I am very glad that it exists right now.


[This message has been edited by V21 (edited 09-17-2001).]

[This message has been edited by V21 (edited 09-17-2001).]

Does the coverage apply equally to upgrade awards, so that one could make a claim for the difference between coach and business class fare, for instance? Is there an underwriter or reinsurer to guaranty payment of benefits?

Also, I have answer to the preceding question about whether AwardGuard could plead with airlines to cancel a program so as to release AwardGuard from its obligations. I am confident that such action by AwardGuard would violate the implied covenant of good faith and fair dealing, at least in California, if such conduct could be proven. Based on the above posts, AwardGuard seems to be run by Randy, and I certainly have no reason to believe he would attempt anything along these lines anyway, but I wanted to share the legal information anyway. I think the question of whether AwardGuard has adequate reserves or reinsurance is the more important question personaly.

Looks like a fine deal to me. http://www.flyertalk.com/forum/smile.gif One question - looked at their website, but it does not mention whether non USA residents may join. Anyone know? Randy?