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?

Sounds like a fine plan. Thanks Randy, will look into it.

I'm in - even if just for the peace of mind. I think their web-site specifically states that upgrade awards are not included.

I signed up this week, simply for peace of mind.

It is clear that the word "insurance" is avoided. This is not an insurance policy in the technical sense of the term, otherwise it would have to charge proportionately to expected benefit and it would have to register in each state. This is more of an "assurance" program.



------------------
On the road,
In the air,
I enjoy travel
From here to there.

I've had AwardGuard for a number of years. (Until a couple of years ago, I was carrying a hefty number of TWA equity miles and wasn't sure I'd get to use them before TWA expired. Even after I used those, I still had substantial non-equity miles on TWA and so kept AwardGuard.) Ironically, I almost let it go this year in view of the AA acquisition, but decided to keep it one more year and monitor US's condition. Now I'm glad I did.

How does an assurance program differ from insurance?

I've looked at AwardGuard, but not sure about purchasing. Looks like you are only covered if the airline completely stops operating and the miles are not picked up by someone else. As I read it:
1. Filing Chapter 11 does not qualify for mileage converage if the airline is still functioning.
2. Discontinuation of an airline's FF program for any reason does not qualify for mileage coverage if the airline is still functioning.

In my view, the airlines are much more apt to file chapter 11 and reorganize while they continue flying or they are more likely to discontinue their FF programs but keep on operating. Total shutdown with another airline not picking up the FF mileage is highly unlikely, particularly with the rumored government bailout. I haven't made a final decision, but am not likely to purchase.

MileKing. Ansett is not part of the program cover, but what you describe as unlikley is exactly what happended to them this week. http://www.flyertalk.com/forum/frown.gif

Anyone know is AwardGuard is signable by folks who live overseas?

We've got members of the program living in some 34 different countries outside of North America. It's not based on where you live, just where your miles live. We've been working on extending the airlines we cover to include many other programs in Asia and Europe and still working on that, but it's very tedious.

As for not covering Chaper 11, the reason that is because in that case, the airline is acting as normal. You can continue to redeem awards and fly the airline, so there's really noting to take action on, other than the fact that airlines going out of business always go through Chapter 11 first. As for the airline dropping their program but keep flying - that has never happened and the odds are it never will. Programs tend to follow airlines. For instance, when Legend Airlines went out of business in the last year, it's frequent flyer program followed it out of business and all members lost their awards - too bad since they had that double miles for life promotion. Midway is one of the more unusual casualties of the indistry because some of you may remember that right before they closed their doors, Northwest had agreed to purchase them and everyone was joyed. When Northwest out of the blue changed their mind, Midway closed the very next day. There are no certainties in this business. I actually support legislation that miles and awards are a tangent liability and should be covered in any bankruptcy situation. I have yet to find many people that will support my position.

Anyway, hope your questions have been answered. Post any others if not.

Thanks Randy. I am convinced it is for me.

No less than the Australian Government agrees with your last point FWIW! Bet 2.5 million Australians wished you had covered that schme with AwardGuard. http://www.flyertalk.com/forum/smile.gif

www.news.com.au/common/story_page/0,4057,2914274%255E15488,00.html

Air NZ asked to help loyal travellers

23sep01

The Australian Federal Government yesterday appealed to Air New Zealand to make sure Australia's 2.5 million Ansett frequent fliers did not lose their entitlements.

While the Government hopes Air New Zealand management will guarantee frequent fliers, industry experts and legal pundits held out little hope that people would see their points again.

A spokesman for Transport Minister John Anderson told The Sunday Telegraph the Government believed responsibility for frequent-flier points lay across the Tasman.

"The Government's view is that when Air New Zealand bought Ansett, it also carried over its assets and liabilities, including the frequent-flier program," the spokesman said.

"While there is no legal requirement to honour them, there are 2.5 million Australians who hold a different view and say Air New Zealand should honour them."

I applaude AwardGuard as a concept but since its limited to a few US carriers plus BA (North America) and AC its not really that useful for me. So far in the last month it looks like I have lost my miles in both Ansett's Global Rewards and now SwissAir's Qualiflyer, neither of which are covered. Hopefully world wide coverage will happen soon.

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.

Stay tuned, i'm sure there's plenty more news to come on all the airliens woes.

Just found out www.milepoint.com has an offer for AwardGuard. Here's what it says:

Two Year Membership $214.00 USD
[MilePoint members can use 5,350 miles to save 50% on this program. Final cost for MilePoint members is $107.00]


It appears to be the identical program offered through Webflyer. However, it did not say what it offers for a family plan.

Randy:

Could you have a US programs policy and a separate non-US and US programs policy.

That way US members need not pay a higher premium whilst I could get cover for my non-US schemes too.

Just a thought.

Randy:

No offense, but I have to go with NoStressHere on this one.

An insurance company is only as strong as the financial resources they have available to pay off claims. I sent an e-mail to AwardGuard with this concern, and received what looks like a form e-mail which did not address the issue.

For "regular" insurance (auto, liability, etc.), I can go to A.M. Best and check the rating of the insurance company. Best's rating is the accepted standard in the industry. I've seen many different types of contracts which specify a minimum required Best's rating in the insurance clause.

So back to NoStressHere's issue: what sort of independently-reviewed information is out there that the more skeptical among us can use to assure ourselves that AwardGuard has the financial resources to pay out in the event of a big hit?

[This message has been edited by cubsfan10 (edited 10-06-2001).]

(bump in light of current circumstances)

Has anyone purchased AwardGuard since 9-11?

Any new insight or experience to share?

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.