Hospitality industry faces new challenges during World Cup – Mutual & Federal

As the 2010 FIFA World Cup approaches, approximately 320 000 international visitors are expected to enter the country and literally rock the foundation of the hospitality industry.

Edward Paul, general manager – Product, Actuarial and Reinsurance at Mutual & Federal, one of South Africa’s leading short-term insurers, says, “The influx of tourists will certainly bring a wide range of opportunities to the hospitality sector. However, there will also be a significant increase in the risks facing all players in this industry. With that said, it is imperative that all businesses are adequately insured to mitigate potentially financially crippling events.”

While some of the more common risks such as an increase in criminal activity have recently been promulgated by the media, there are many other risks that business owners might not be aware of.

5 important risks facing the hospitality industry

1. Liability claims

If for example a local or overseas visitor happens to slip and fall in a restaurant due to a loose tile or balustrade and sustain an injury, the owner of the business would more than likely be held liable for the costs related to the injury. It is therefore important to identify potential hazards and secure liability cover to protect your business from unexpected accidents.

2. Increased onsite cash flow

During the World Cup, businesses will more than likely experience a significant injection of cash into their daily turnover. Unfortunately, this also provides criminals with additional opportunities to catch business owners off guard. Mutual & Federal encourages business owners to increase their security awareness and obtain insurance cover that will circumvent this type of financial loss.

3. Malicious Damage to Property by Guests

No business ever expects their guests to purposefully damage property. However, the possibility of this occurring is a reality that business owners should be aware of. Malicious damage to property can be costly if you are not adequately insured. Businesses Interruption Cover should also be considered if you are unable to use the damaged area to host paying guests.

4. Political Unrest

While the South African government has made a concerted effort to make this period as safe as possible for tourists, unpredictable events such as labour unrest or service delivery strikes are still a note for concern. It is imperative that businesses are covered for these types of risks, as this is not an automatic inclusion in short-term insurance policies Mutual & Federal strongly advises all policyholders to confirm with their short-term insurer that they are indeed covered for damages related to political unrest.

5. Motor insurance cover – Passenger liability

To deliver added value to guests, many businesses providing accommodation will also be offering transport as an option. But what happens if your vehicle is involved in an accident? Will injuries sustained by the passengers still be covered by your policy? Although the Road Accident Fund (RAF) presently covers this risk and the common law right to be sued has been removed, this legislation is currently being disputed in court. If common law is reinstated the passenger could hold you liable and take legal action.

“The 2010 soccer fever currently gripping our country has the potential of clouding even the most astute business person’s short-term insurance judgment. When it comes to business insurance Mutual & Federal would like to encourage all players in the hospitality industry to pay close attention to their short-term insurance policy. One error in judgment could cripple your business.” continues Paul.

6 helpful tips to make sure your business is fully protected

1. Contact your broker and request that your business insurance policy be updated as soon as possible and always ask for written confirmation of your insurance cover.

2. Request a full risk analysis of your business to determine your risk exposure, specifically during the World Cup.

3. If you require specialised, short-period cover, ensure that your premiums are paid up prior to the start of the insurance period.

4. Make sure that you understand your business insurance cover before the need to claim arises. If not, contact your broker or insurance advisor and ask for a detailed explanation.

5. Consider the provision of safes and the secure holding of guests’ valuable possessions to minimise your risk.

6. Ensure that adequate disclaimers have been approved by your attorneys and are clearly visible to your guests on your businesses premises.

In conclusion Paul says, “The World Cup is going to bring a myriad of opportunities to the hospitality industry. We encourage all business owners to do their due diligence in mitigating any risks. Doing this will ensure that the hospitality industry receives the success it deserves during this spectacular sporting event.”

Mutual & Federal encourages all its brokers and intermediaries to contact their clients to ensure that they are adequately prepared for the 2010 FIFA World Cup.