Risk & Insurance

How Risk Influences Travel Decisions


Tourists are faced with a multitude of decisions when deciding on a holiday destination and one of these is definitely insurance. If something goes wrong, they want reassurance that they will be financially compensated for their loss. By Paul Halley.

Tourism is one of the most dynamic industries in any economy. This is driven largely by the highly global and competitive nature of the industry as well as the perceptions of customers or tourists. Trends come and go and are influenced by many obvious, and just as many not so obvious factors that are at play at any one time.

Given this highly exciting dynamic coupled with the less exciting and unpredictable issue of risk and security, succeeding in the tourism sector can be challenging to say the least. Operators, irrespective of where they sit on the value chain need to be adaptable and versatile. They need to have an almost sixth sense for local and global trends in travel and the factors influencing tourist spend decisions. They need to select their suppliers very carefully.

As if this weren’t challenging enough, operators are also highly affected by the tourists’ perceptions of security and risk, factors which are very often well beyond their control. Aside from the real adrenalin junkies who actively seek out the highest risks when making travel decisions most tourists want some peace of mind when it comes to their personal safety and security at their intended destination. This is even more prevalent when families travel and when inbound tourists travel from a more secure home environment such as Europe or the US. Travellers from these “first world” markets are accustomed to certain standards and controls.

Risk Management

Whilst local operators have very little direct control over the socio economic or even political stability of their country they do have a significant control over their own risk management practices and attitude toward risk control within their establishment or operation. This can be as simple as ensuring all their drivers carry the necessary driving permits and have a minimum number of years’ driving experience, to employing a full time security and risk management expert at their premises. This subtle, yet fundamental focus on risk management, is indicative of the operators’ general attitude toward their customer or guests safety and influences tourists decisions significantly.


Notwithstanding, the nature of risk is that it cannot always be avoided or managed entirely. This is where the correct insurance protection becomes essential. Not as an alternative to risk management but as means of appropriately transferring the financial implications of such risks an extension or component of the risk management and security process. The correct cover, placed following a thorough assessment of risk, mitigation of the obvious exposures and selective transfer of those risks, which simply cannot be predicted or avoided completes the risk management process.

Selecting the correct insurer is as important as the identification of the need for risk management in the first place. After all, as the saying goes, you hope you may never need to use the parachute, but when you do it had better open. Given the dynamic nature of the tourism sector, the ever changing risk environment, the legislative and moral safety issues involved, a thorough understanding of the underlying market by your underwriter and broker is essential.

Nothing replaces experience in expertise and a specialist focus when it comes to an understanding of a tour operator’s risk management requirements. Certain insurance underwriters, such as Ascent Underwriting Managers, have the necessary expertise to advise their clients accordingly.

With Ascent, the tour operator gets over 15 years of industry specific risk management understanding and experience. Ascent’s specialised focus translates into an innovative product range, as dynamic as and designed specifically for the tourism sector. With an understanding of the local environment and the tourism sector’s risk and exposure extending from the point of reservation, transport, accommodation and through to the leisure aspects enjoyed by the tourist, Ascent offers a comprehensive range of covers and integrated risk management understanding, which assists their clients by ensuring that their guests safety and security comes first.

For a firsthand understanding of the benefit of experience and specialisation when managing your risk ask your broker to contact Ascent Underwriting Managers directly and see why Ascent’s slogan pretty much sums it up: “insuring your business, ensuring your future.”

For more information visit: www.ascentsure.co.za

About the Author: Paul Halley has over two decades in underwriting and Risk Management experience, fifteen years of which have been dedicated to developing and innovating products focussed specifically toward the Tourism, Hospitality and Entertainment Sectors. As an entrepreneur with experience in both the corporate insurance market and having been involved in the founding of a number of small to medium sized companies, Paul has industry specific knowledge and an understanding of business generally. Paul has been involved in the underwriting and risk analysis of operators from the smallest bed and breakfast to multinational and global hotel chains and pretty much everything in between. Paul has a passion for tourism and is an avid traveller and adventurer himself giving him the unique ability to see and understand the effects of risk from many angles.

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