Thomas Cook collapse leaves PI claimants unprotected


Leadsom: Surprised and shocked by Thomas Cook’s actions

The government has pledged to set up a statutory compensation scheme for people making personal injury claims against failed holiday company Thomas Cook after it emerged the firm mainly self-insured them.

But it is unlikely to provide the level of compensation that some claimants might otherwise have expected from an insurer.

Speaking in Parliament ahead of its dissolution earlier this week, business secretary Andrea Leadsom said it was “a great surprise and shock to see that there was an attempt at self-insurance with no proper provision made for these types of claims”.

She said Thomas Cook took out insurance cover for only the “very largest” claims.

She continued: “For agreed claims below this figure, up to a high aggregate amount, the company decided to self-insure through a provision in its accounts.

“As Thomas Cook has entered liquidation without ensuring any protection for pending claims, the vast majority of claimants who are not covered by the insurance, including customers who have suffered serious injuries and loss of life, will be treated as unsecured creditors.

“This means that it is uncertain whether they will receive any of the compensation they would ordinarily have received against their claims.”

The prospect for some customers facing significant financial hardship through no fault of their own was “unacceptable”, Ms Leadsom said.

“The government cannot and will not step into the shoes of Thomas Cook, but we intend to develop proposals for a statutory compensation scheme. Any scheme must strike a responsible balance between the moral duty to respond to those in the most serious financial need and our responsibility to the taxpayer.

“Accordingly, it will be a capped fund that is sufficient to ensure support for those customers facing the most serious hardship as a result of injuries or illness for which UK-based Thomas Cook companies would have been liable.

“We will develop the scheme to ensure that only genuine claims are provided with support. The scheme will not consider routine claims covering short-term problems.”

Legislation to establish the scheme would be brought forward “urgently” after the election if the Conservatives remained in power, and Ms Leadsom said “I am sure that any new government would wish to do likewise”.

She said she has also written to the official receiver, who is investigating the conduct of Thomas Cook’s directors relating to the insolvency.

“It was never envisaged that a UK tour operator would fail to insure itself fully to cover claims for personal accident or fail to ensure that it had ring fenced the funds to meet those liabilities so that they were safe if the company got into difficulty.

“The company has a legal obligation to cover personal injury claims arising from package holidays abroad, and that is why I have asked the official receiver to investigate, in particular, this aspect of the conduct of Thomas Cook’s directors.”




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.