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Subscribe to our
bi-monthly
HPASA newsletter. |
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June 2012
THE
EFFECT THE CURRENT ECONOMIC EFFECT
IS HAVING ON THE WAY YOU INSURE YOUR
BUSINESS.
By Gavin Courtenay,
Managing Director of SATIB Insurance
Brokers |
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"Risk product fees
have remained constant in the current economic
recession but owners and operators of hospitality
establishments have been forced to cut operating
expenses. Insurance premiums are certainly
an expense that have come under close scrutiny,
says Gavin Courtenay, Managing
Director of SATIB Insurance Brokers.
However, insurance premiums are primarily
based on two crucial aspects; risk exposure
and self-insurance. In order to reduce premium
we advise our clients to either increase
their excess margin (the portion of a claim
that would be self-funded in the event of
loss) or mitigate their exposure to risk
- usually it requires a combination of both."
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Complete Assessment
Mitigating risk requires a complete assessment
of all areas that could potentially result
in significant financial loss in the event
of an incident occurring and in compiling
written procedures to reduce and manage
such risks. A daunting task considering
the complexity and diversity of South Africa's
varied accommodation offerings, from home-stays
to guesthouses, hotels and remote safari
lodges but an area of expertise that SATIB
have perfected over their 21 years of providing
risk transfer solutions to the hospitality
sector. |
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Reduced
Risk
"Insurance underwriters will rate
an establishment’s premium favourably
if presented with documented risk mitigation
procedures, says Courtenay.
To supplement and endorse our clients' documentation,
we also provide underwriters with proof
of medical evacuation insurance cover, which
is provided to our clients as a value-added
service through our SATIB24 Crisis Call
facility and underwritten by our own Cell
Captive. This service not only provides
24-hour assistance to our clients' guests
but will also pay for medical intervention
costs. We have found that by handling incidents
of guest injury in a punctual and professional
manner, the likelihood of a claim being
instituted is vastly reduced and underwriters
take cognizance of this when rating the
risk." |
Cancellation not an Option
Simply cancelling insurance policies to reduce
expenses is certainly not an option, as legislation
requires that hospitality establishments have
insurance cover in place. Certain trade associations,
such as the Southern African Tourism Services
Association (SATSA) have minimum insurance indemnity
requirements for membership. This being the case,
then one would think that getting alternative
quotes from a variety of brokers and accepting
the lowest premium might be a solution to cutting
expenses.
Unnecessary Risk
"I'd strongly advise against accepting the
lowest premium, says Courtenay. When assessing
a new client's risk profile we often come across
existing insurance policies in place that are
totally inappropriate. In fact, if a claim were
to be made these policies would not respond, which
is not only a waste of money as it renders the
client essentially uninsured and exposed to the
very risks that they sought to transfer. Dealing
with a reputable and experienced insurance broker
who understands the hospitality industry and how
to attain the best possible premium from underwriters
is essential in these tough economic times."
Professional Indemnity Claims
"In addition, one also has to consider
that tourists themselves are under severe budgetary
constraints and will use any opportunity that
presents itself to make a claim for financial
compensation, specifically where physical injury,
negligence, errors or omissions is concerned.
We have noticed an increase in professional indemnity
claims over the past year" concludes
Courtenay.
Key
Message
So the key message is really this:
The current economic situation should drive
those with cover requirements to engage
in specialist brokers/risk managers, who
will be qualified to structure your risk
transfer needs in line with your exposure
and appetite to manage risk. |
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| For
more information
on business liability
insurance and other
insurance options,
contact Brett Lazarus
of SATIB Insurance
Brokers on 0861
728 4248 or blazarus@satib.co.za |
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