In the digital information age people and businesses are driven more by technology and mobility than ever before, which can and does lead to errors and omissions. Paul Halley, Managing Director of Ascent Underwriters provides advice on how to transfer this risk.
In many respects this has simplified multiple aspects of daily life whilst simultaneously speeding up and extending accessibility to information. Consequently, this has enhanced the availability of travel products and extended the value chain whilst increasing the choice of tourism suppliers and travel activities.
Growing traveller demands combined with consumer expectations are met with a sophisticated platform of products and options providing travel products from anywhere in the world to anyone in the world. With this increased level of sophistication and choice come inherent risks which can be easily overlooked in the fast paced highway of travel and tourism.
Gone are the traditional limitations and boundaries of how travel was transacted. The modern traveller comes from a broad range of backgrounds and cultures carrying with them an even broader range of ideals and expectations based more on those to which they are accustomed than those which they encounter whilst away. As the market develops so a customary set of standards, rights and obligations begins to emerge.
In a consumer driven world the legal obligations of suppliers have increased tenfold and will continue to do so in line with international agreements and global standardisation. This is exacerbated by the pace of change and development that happens around us each day. Despite all the technology we are simply unable to keep up and process the flow of data and information fast enough. Yet we remain legally accountable for failing to do so.
It is essential that suppliers stay in touch with these trends and ensure they protect their business, their investments and their reputation against increasing risks brought about by these changing trends.
Liability
When measuring risk it is easy to foresee the loss of a fixed or moveable asset. A tangible item carries a definitive value and can be readily replaced. Not so with liability. There is simply no way of accurately determining whether, when or for what value a potential liability may arise. With so many suppliers in a single value chain it is all but impossible to inspect and be held accountable for every aspect of every transaction. Add to this the complex and onerous terms of trade contained in many agreements and it’s clear that the travel agent, tour broker and tour operator face a multitude of real or opportunistic liability threats from customers and also suppliers.
Whether liability in any particular set of circumstances actually exists or not is not always important. Even in cases where no direct link between the event and the supplier exists genuine or frivolous legal attacks may be suffered by the operator and /or suppliers.
Bodily injury, death, loss of or damage to property and the consequential losses which follow them can arise from the ownership of property, operating in business, or as is most often the case in service related industries’ from professional errors or omissions, breach of contract or neglect of professional duties. Rather than try and cover the entire range of possibilities with hypothetical analogies, some real life examples of actual claims should be able to illustrate the risks of operating in this professional environment far more effectively:
Example 1. A Corporate insurer (client) requests an incentive travel company (supplier) to charter two Boeing aeroplanes as part of a rewards programme for top achievers. The night before departure one of the aircraft (privately owned) chartered from an air charter company (third party supplier) is involved in a minor collision on the apron and cannot fly until the necessary safety inspections have been performed and certification issued.
When the air charter company (third party supplier) cannot source a replacement plane and only one plane arrives, the Corporate insurer (client) charters a third plane independently at a cost of close on 1million rand. Recourse is sought from the incentive travel company (supplier) who is in no way responsible for the collision but has, it is alleged, inadvertently failed to perform in terms of the contract. It is claimed that this is a breach of their professional duty not to have foreseen such an eventuality and to have had a contingency plan.
Example 2. A British couple (client) holidaying at a 5 star hotel (third party supplier) after making reservations through a SA based Tour Operator (supplier) in one of the premier tourist zones of the mother city steps out of their hotel and falls over some loose paving. The injuries, whilst not life threatening, are severe enough to force their return home immediately.
The balance of their extensive African safari is cancelled and in addition to the medical costs a significant loss of money is suffered by them as a result. The QC accustomed to EEC trade articles wastes no time in approaching the SA based tour operator for compensation in Pounds Sterling.
Whether in fact liability exists or not is most often left to the legal fraternity to decide. In the worst case scenarios some cases eventually lead to the courts. Not every incident progresses to this point and in many cases liability does not exist or is shared in apportionment with other suppliers in the value chain and sometimes, on a contributory basis, even the third party themselves. Whilst damages in cases where liability exists may be severe and in limited circumstances even reach millions of rands (after converting from other currencies) the cost and inconvenience of simply defending cases where no liability exists at all can escalate very quickly into tens or hundreds of thousands of rands. It is here where the real value of liability insurance exists. The costs of repelling or defending these claims together with expertise required can cripple small to medium size operators. If handled incorrectly by inexperienced persons the results may have a long and devastating effect on the reputation and brand of the operator.
For a relatively small premium, arguably, the most valuable insurance cover an operator in the tourism sector can have is a Professional Indemnity and Broad form Liability policy from a specialist insurer who understands their business and the risk to which it is exposed when selling the amazing destination that is South Africa or sending South Africans on international adventures.
For more information or to find a specialist insurance broker, call 0861 286 264 or email [email protected]
