As a tourist destination, South Africa has a great deal to offer, with many tourists flooding wildlife reserves and boutique lodges to experience an authentic African bush adventure. And while the hospitality industry gears to deliver a memorable experience, the potential remains for something to go wrong, especially when wild animals and the ‘Big Five’ are in the equation.

To mitigate the inherent risks, the safari hospitality industry typically requires a variety of insurance solutions to protect the business from unforeseen circumstances, in addition to a robust risk management programme that is optimised to minimise the risk to paying customers and employees.

“The specific insurance needs of a hospitality business will depend on various factors, such as the size of the business, the type of services offered and the location of the business. It is important to consult with an insurance broker with specialised knowledge and experience in the hospitality sector to determine the appropriate coverage for your business, for what are often unique and unusual risks, that carry hefty financial and reputational liabilities,” says Andrew Aubin, Regional General Manager – Coastal Region for Aon South Africa.

Aon offers some insights into the key risks that businesses in the hospitality industry may be faced with:

1. Property insurance
This protects the physical assets of the business, including buildings, furniture, equipment and inventory, from damage or loss due to fire, theft or other covered events. The type of building also factors into the equation, as a normal brick and mortar building would be rated differently to that of a thatched building, wooden lodge or tented camp. Insurers will also look at locations in terms of flood lines and of course any exposures to wildlife.

2. Liability insurance
Liability insurance is critical for any wildlife reserve/private game farm where guests engage in activities that can potentially be dangerous, such as game drives, wildlife hikes/walks, river rafting, horse riding and the like. Liability insurance provides coverage for bodily injury or property damage caused by the business or its employees to third parties, such as guests or vendors.

“Checking contractual agreements with suppliers such as tour operators and other third-party providers is critical, as a destination facility may be faced with added liability exposures from an offshore perspective. If contractual wording is not thoroughly checked, a private game farm or wildlife reserve could potentially be held liable in the country where a foreign guest resides. It is, therefore, crucial to check that contractual agreements are restricted to South African jurisdiction,” Andrew explains. 

If your facility is using European tour operators and/or hosting guests from Europe, it will be worth your while to speak to your broker about including the E C Directive in your insurance schedule, which will indemnify the insured in respect of all liability pursuant to the European Community Directive 90/314/EEC Article 5, the Package Travel Regulations 1992, and any subsequent legislation enacted with the European Community. If an incident occurs, the E C Directive will provide some cover in the event of a legal case may fall outside of South Africa’s jurisdiction.

Passenger liability also features strongly in the hospitality industry, as many facilities offer transport to guests which adds another dimension of liability to the mix. “Accidents, whether on a private or public road, fall under the ambit of the Road Accident Fund (RAF) and are not covered under a hospitality facility’s passenger liability covers, unless the client is paying for the service. It is, however, crucial for facilities to retain Passenger Liability cover as a contingency cover, as there are incidents that would be excluded under the RAF, such as emotional trauma. In these incidents the insured could be sued directly and passenger liability would have to respond. It is also important to note that if the vehicle crosses the border into a neighbouring country, which is possible with open borders on game reserves, any benefit derived from the RAF will not be applicable if an accident happens across the border and outside of SA,” Andrew warns.

3. Complying with legislation
The hospitality industry has numerous legislative aspects to contend with. In an increasingly litigious environment, these legislative requirements have the potential for severe financial repercussions in the form of fines and settlements, not to mention any reputational damage. Some of the legislative aspects to manage, include:

• The Protection of Personal Information Act (POPI)
• Basic Conditions of Employment Act
• Occupational Health and Safety Act
• Food and hygiene regulations
• Liquor and tobacco legislation
• Gambling regulations
• Copyright, trademarks and patents

“Any of these legislative frameworks have the potential to hold personal, professional or business risk to players in the hospitality industry. It is crucial to unpack these from a Professional Indemnity, Directors & Officers and/or a liability point of view with the aid of a broker who has a thorough understanding of the hospitality landscape,” says Andrew.

4. Strikes, riots and civil commotion
The risk posed by strikes, riots and civil commotion (SRCC) needs to be considered. From a South African perspective, Sasria SOC Ltd offers insurance against such risks in terms of various Sasria products in accordance with the Public Finance Management Act No 1 of 1999. “It is important to speak to your broker about including Sasria SOC Ltd cover relating to property damage, business interruption, money, goods in transit, motor and guest-related risks,” Andrew recommends.

Travel insurance also comes into play and should be a recommendation to any foreign national planning a visit to South Africa.

5. Natural Catastrophes
South Africa is no stranger to the devastating losses of weather catastrophes. In the last few years, heavy rainfalls, flooding and wildfires have increased in frequency and intensity. In Aon’s latest 2023 Weather, Climate and Catastrophe Insight report, flooding was identified as the second largest peril across the globe and the most prevalent peril on the African Continent, with a devastating economic loss of $66bn (R1,185bn). While the KZN floods of April 2022 were noted as the largest flooding event on the continent with an economic loss of $3.6bn (R64,672bn).

“It is certainly a risk that the hospitality industry needs to factor into the equation.  Where there isn’t an insurance solution available, a contingency plan needs to be put in place to facilitate guests and navigate the risks. Events of this nature could lead to cancellations or even an inability to reach the hospitality venue. Loss of attraction, cancellation and business interruption covers would come into play in these scenarios in variable degrees and would warrant a discussion with a specialised broker to ensure that your hospitality industry is thoroughly prepared for adverse weather events,” says Andrew.

“Making better decisions about the right insurance solutions that are designed for the bespoke needs of the hospitality industry is key in keeping your business afloat even in the face of severe adversity. Always engage with a professional insurance broker and risk advisor, such as Aon, who has a thorough understanding of the hospitality landscape, whether you are a family-owned B&B or a large five-star private game farm – the risks and exposures remain the same. Being better informed of the risks and liabilities your operation could potentially be faced will inform better decisions around the sustainability and risk preparedness of your business to recover in the face of adversity,” Andrew concludes.

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