Risk conscious SA hospitality industry in good shape

Prospects in South Africa’s tourism and hospitality industry remain very positive, according to a specialist underwriter in the industry that says companies in the sector have witnessed a reduction in liability claims last year.

This is according to Nevin Sandra, Commercial Manager of Hospitality Industrial and Commercial Underwriting Managers (Pty) Ltd (HIC), a subsidiary of Lireas, the strategic investment company of the Hannover Re Africa, who says this may be due in part to the fact that industry has become increasingly risk-conscious, particularly since the World Cup, with the fact that they are managing their risks better.

However, Sandra notes that operators in the industry must remain vigilant, especially in South Africa’s summer vacation peak season, which can extend until late January with most universities only re-opening in February. “Based on our claims statistics, the frequency of claims does increase significantly between October and March, by around 36%. This is of course consistent with the summer holiday season but it also indicates that operators need to take even more care during these periods, particularly smaller establishments and those who are relatively new in the hospitality industry. As a result, it is critical for such businesses to make sure that they have appropriate liability insurance cover.”

Sandra clarifies that, as with any other business, clients in the hospitality industry run the risk of incurring legal liability, where the hospitality business has the responsibility to pay another person for unintended and/or unexpected harm or damage. “For example, if a guest slips on a wet floor as a guesthouse domestic cleaner begins mopping a porcelain tile floor with soapy cleaning liquid, the guesthouse can be held liable for medical expenses and loss of earnings.”

The most frequent claims over a two-year period have been damage to third party property, mainly at the insured’s premises, followed by claims for injuries sustained by guests. Despite the fact that liability claims are relatively easily incurred, he confirms that business owners are definitely shopping around for less cover with more affordable premiums.

He therefore offers the following advice to anyone in the hospitality industry who is currently struggling, business-wise, in this current economic climate.

When shopping around for cheaper premiums, clients need to be very careful about the scope of cover they are getting relative to the premium they are paying.

Sandra strongly advises against those business owners in the hospitality industry cancelling their policies in order to save costs, in the hope that chance will favour them. “This is tantamount to them gambling using their business as a betting stake. If chance does not favour them it could result in financial ruin,” he concludes.