According to a recent article in Forbes, “travel protection” was originally offered by cruise lines and other travel organizations as self-funded trip cancellation protection that paid the cancellation penalties if a client canceled a trip. It was sold through travel advisors and the travel organization’s own telephone reps for a modest price.
The idea was simple: If a cruise line booked a stateroom for a client who later wanted to cancel, they could cancel and receive a full cash refund or credit—if they had purchased the Trip Protection Option. This was a low risk to the cruise line, since the stateroom could be resold to another passenger. It was an easy sell for travel advisors and paid a low commission.