It comes amid fears that hotels have increased room rates as peak season takes hold, meaning substantial price rises for those that had rooms booked through Lowcost which were subsequently cancelled following the group’s failure.

If agents dynamically packaged they will be liable to refund or replace a customer’s holiday, and if they are not covered by supplier failure insurance, they will have to foot the bill out of their own pockets.

Lawrence Assock, head of commercial partnership and underwriter at insurance company Affirma, said there was further frustration for some agents, as they realised that their own supplier failure insurance didn’t go far enough.

“There are two types of insurance that agents can take,” he said. “Supplier failure insurance, which covers the cost of a customer’s hotel if the agent has to foot the bill for it, but not the extra amount if the hotel price has to go up. And complete supplier failure insurance, which covers the original cost of the accommodation and any extra increase that has been added as a result of prices going up.”

Assock said he believed there was a “large chunk of agents” that did not have either. “There will be a fair few that aren’t covered. One of the consortia groups that we work with had around 100 agents that booked with Lowcost, and only 20 of these had some kind of supplier failure insurance.

“The biggest problem with financial protection is that a lot of agents with Atols assumed they were covered by this – they didn’t realise Atol only covers their clients if they as the agent goes bust. Suppliers normally have Atols to cover them in the event of failure, which agents can make a claim against, but Lowcosttravelgroup obviously wasn’t covered by Atol.

“It’s only now that a lot of agents are realising that they needed to have supplier failure insurance if they dynamically packaged up holidays for clients,” he added.

“There could be some agents that did an awful lot of bookings, and with many hotels the cost of rooms has risen. If the customer has booked with an agent, the customer shouldn’t have to pay more.

“These are the agents that will lose out and will have to foot the bill or refund the customer. I would think there are quite a big chunk of these. Hotels aren’t profiteering, they’re selling at the rack rate as it’s peak season.”

Assock said he had received a notable increase in calls from businesses wanting to upgrade to complete supplier failure insurance following the news about Lowcost.

Matt Gatenby, partner at Travlaw, also agreed that a number of agents could be hit by the collapse.

“Of all the companies that contacted our firm in the wake of Lowcost’s collapse, only around half of them were covered by supplier failure insurance,” he said.

Jonathan Wall, managing director of accountancy firm Elman Wall Limited, added: “There’s a lot of people that have used Lowcost as an accommodation supplier that will have an obligation to clients and will be exposed.”