Un­der­stand­ing Tourism Trade In­sur­ance

Tourism Tattler - - RISK -

We all know that in­sur­ance is an essen­tial com­po­nent of risk man­age­ment that re­quires an­nual re­view to ad­just to changes in the com­mer­cial cir­cum­stances and le­gal en­vi­ron­ment in which we op­er­ate. What we may need re­mind­ing of are the spe­cific risks that are unique to the tourism trade and need to be con­sid­ered when mit­i­gat­ing and trans­fer­ring risk, writes Des Langk­ilde.

The fol­low­ing ar­ti­cle will be pub­lished in the Tourism Tat­tler as a series each month, and has been ex­tracted ver­ba­tim (with slight edit­ing) from the South­ern African Tourism Ser­vices As­so­ci­a­tion (SATSA) In­sur­ance Di­rec­tive book­let with ac­knowl­edge­ment to SATSA and the spon­sor of the book­let, SATIB In­sur­ance Bro­kers, in whose em­ploy I orig­i­nally re-wrote the text in 2005 and up­dated in 2015.


In­sur­ance is an emo­tive is­sue and viewed by most as a ‘grudge pur­chase'. No-one likes pay­ing in­sur­ance pre­mi­ums for some­thing that may or may not oc­cur but it just might hap­pen to your com­pany and you owe it not only to your­self and your clients, but more im­por­tantly to the tourism in­dus­try at large, to be ad­e­quately in­sured and fully aware of the pro­ce­dures in the event of an ac­ci­dent or a claim.

The SATSA In­sur­ance Di­rec­tive is in­tended as a gen­eral guide for com­pa­nies op­er­at­ing in the tourism field within South­ern Africa. It is di­rected to all com­pa­nies un­der­tak­ing tours, of­fer­ing ac­com­mo­da­tion of any na­ture, those pro­vid­ing an aux­il­iary ac­tiv­ity, and op­er­at­ing or hir­ing out any form of trans­port what­so­ever.

It is not the in­ten­tion of this Di­rec­tive to frighten any­one, in fact quite the con­trary. It aims to put for­ward a re­al­is­tic set of pa­ram­e­ters that ap­ply to South­ern African con­di­tions and cir­cum­stances and is not based on threats and pro­hib­i­tive laws that may gov­ern other coun­tries. As a pro­fes­sional tourism ser­vice provider you live, work and op­er­ate in South­ern Africa and it is im­per­a­tive that it is the tourism in­dus­try it­self that set the guide­lines by which you are pre­pared and in fact able to func­tion. Ob­vi­ously these must be based on world norms and the in­dus­try must as­pire to first world stan­dards.


The Euro­pean Com­mu­nity Di­rec­tive 90/314/EEC re­lat­ing to the Pack­age Hol­i­days and Travel Trade Act, 1995 is leg­is­la­tion that gov­erns the con­duct of Tour Or­gan­is­ers op­er­at­ing from within Euro­pean Com­mu­nity mem­ber states.

The Act seeks to pro­tect the con­sumer by mak­ing the Tour Or­gan­iser li­able for the proper per­for­mance of the whole tour pack­age, even if the fail­ure or im­proper per­for­mance is due to the fault of a sup­plier out­side of the EC of one or more of the ser­vices pro­vided. If a tourist books a sa­fari hol­i­day in South Africa through an or­gan­iser in the UK and is in­jured at a Game Lodge in South Africa, he need only prove that the Lodge was li­able for the in­jury in or­der to suc­ceed in a claim against the or­gan­iser. Thus, the UK tour or­gan­iser is held legally li­able for an in­ci­dent where there is no ‘fault' on their part. In light of this ‘li­a­bil­ity as­sumed by con­tract' rul­ing, tour or­gan­is­ers in the EC mem­ber states are very cau­tious in their deal­ings with South­ern African tourism ser­vice providers and will want re­as­sur­ance that the ser­vice provider's li­a­bil­ity in­sur­ance will re­spond to valid claims and ex­tends to cover the ser­vice provider's sub-con­trac­tors. In ef­fect, the lo­cal tourism ser­vice provider would need to en­sure that their li­a­bil­ity in­sur­ance pol­icy word­ing ex­tends to cover the EC Di­rec­tive as ‘li­a­bil­ity as­sumed by con­tract' would gen­er­ally be ex­cluded in most in­sur­ance pol­icy word­ings, un­less specif­i­cally re­quested.


The first thing to un­der­stand about risk is that it is part of our ev­ery­day lives.

“Risk is uni­ver­sal, present in all things, all lives, in­her­ent in be­ing. The con­cept of a per­son free from risk is as the­o­ret­i­cal as the con­cept of per­fec­tion” (Jawarhar­lal Nehru – 1889-1964).

Given that risk is in­her­ent in be­ing, the ques­tion is not so much about how to avoid risk as it is about how to min­imise the con­se­quences of risk oc­cur­rence, from both a fi­nan­cial and rep­u­ta­tion point of view. Con­sider these three ba­sic the­o­ret­i­cal prin­ci­ples:

• When­ever an event re­sults in the loss of tourist lives (es­pe­cially in­ter­na­tional tourists), the global me­dia are al­most cer­tain to re­port it, forc­ing the lo­cal tourism in­dus­try to be em­broiled in acts of cri­sis man­age­ment.

• Per­cep­tions about a par­tic­u­lar tourism re­lated cri­sis tend to be al­most as dev­as­tat­ing as the cri­sis it­self.

• The far­ther away one is from a cri­sis lo­ca­tion, the worse the cri­sis will ap­pear to be and the longer the cri­sis will re­main in the col­lec­tive travel sub­con­scious.

These prin­ci­ples high­light the need for re­spon­si­ble risk man­age­ment pro­ce­dures in ev­ery as­pect of the tourism in­dus­try, from trans­port to at­trac­tions, from ho­tels to con­fer­ences.

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