The collapse of tour operator AVG Travels PTY Ltd has put a specific travel insurance distribution model under scrutiny: policies sold as part of a package by the tour operator itself, leaving policyholders with no recourse when that operator ceases to exist. According to Stuff, AVG Travels PTY Ltd entered liquidation on May 26, 2026. The Australian-based company, owned by Melbourne-based Vietnamese national Duc Tiem Dao, had operated a New Zealand-registered entity under the same brand, offering discounted tour packages across Asia and other destinations. Dozens of New Zealand travellers were caught mid-booking or mid-travel when the liquidator was appointed.
Among those affected was an Ōamaru woman who had booked an 11-night China package with AVG for close to $7,000. The booking included flights, accommodation, guided tours, and a travel insurance policy arranged through AVG. When the company folded, the insurance policy – procured through the same vendor – became unenforceable. AVG’s email to affected customers directed them to contact their insurance providers to “assess whether you can make a claim.” For those whose coverage had been arranged by AVG itself, the advice had no practical application. “Makes me feel very shitty, really,” the woman said, as reported by Stuff. The payment structure of her booking compounded the loss. A deposit of around $600 paid by credit card may be recoverable through a chargeback, though the process could take months. The woman has since lodged a complaint with the Banking Ombudsman.
The AVG collapse illustrates a structural gap in how consumers understand policy ownership: a travel insurance product bundled into a package is still a contract between the traveller and an underwriter, but when the intermediary distributing that policy – in this case the tour operator – is the counterparty to the main transaction, the collapse of that intermediary can sever the consumer’s practical access to coverage, particularly if the policy documentation was never independently held or clearly attributed to a licensed insurer. The woman subsequently purchased a standalone policy from a third-party provider for her next trip. “I won't be stung twice,” she said.
The payment split in the AVG case – a partial deposit by credit card, with the balance settled by bank transfer – is a pattern that leaves claimants in an uneven position. Credit card chargebacks offer a recovery path, but only for the portion of the transaction processed through the card network, and the process is not immediate. Bank transfer payments carry no equivalent consumer protection mechanism under current New Zealand arrangements.
John Downing, 71, of Christchurch, who had booked a $4,400 China tour independently of the AVG package, had arranged his own flights separately. His loss, while still disruptive, was contained to the tour cost rather than a bundled product that included an insurance component. “We didn't even know what hotel to go to,” Downing said, recounting the day the itinerary arrived with hours to spare before the liquidator’s notification followed. “We sort of suspected that something was going to happen, because it was so close to the deadline. We just sucked it up,” Downing said, as reported by Stuff. A Facebook group for affected customers reported losses of up to $30,000 among individual members, reflecting the range of package values involved.
The AVG situation sits against a backdrop of broader underinsurance in outbound New Zealand travel. A survey of more than 1,200 adults published by AA Travel Insurance in May 2026 found that 48% of Kiwi travellers take out cover on every overseas trip, while 21% said they rarely or never do. One in five respondents said they would have no means of meeting medical costs if they required treatment abroad. Claims data from Cover-More NZ for the 12 months to February 2026 showed medical and dental treatment was one of the most frequently claimed categories alongside trip cancellations and additional expenses – suggesting the risk is not theoretical for a material share of travelling Kiwis.
For insurance professionals advising clients on outbound travel cover, a March 2026 guide from personal finance research site MoneyHub identified significant variation in policy terms across the New Zealand market. Drawing on more than 500 quotes from over 10 insurers across 20 destinations, the guide found luggage protection ranging from $10,000 to $25,000, and medical expense limits that varied from capped figures of $10 million to $20 million to unlimited – with a price difference of under $20 separating the most basic and most comprehensive options in many cases.
MoneyHub also noted that the New Zealand travel insurance market, despite the number of consumer-facing brands, is underpinned by only four underwriters. The implication for distribution and claims handling is that brand selection is less consequential than policy terms – and that advisers and consumers alike would benefit from scrutinising the certificate of insurance rather than the label on the product.
