Risk Beyond RSA Borders

The evolving situation in Mozambique highlights a broader conversation surrounding cross border risks, including travel, liability and asset insurance. South Africa’s Department of International Relations and Cooperation has issued a travel advisory encouraging South Africans to postpone non essential visits to the country until further notice. While this prompts today’s message, these principles apply whenever you travel or operate beyond South Africa’s borders. This is also as good a time as any to revisit insurance 101.

Insurance 101

Insurance is fundamentally a partnership built on spreading risk and shared responsibility. When you pay your premium, you are contributing to a pool of money that helps protect the insured risk of all policyholders. For this system to work, insurers need to charge the right premium for the actual risk they are covering. Use upcoming travel plans as an example. When you tell us about a high risk trip to Mozambique, you are not just ticking a box – you are helping your insurer understand and properly price the risk. Without this information, insurers might end up covering high risk situations at low risk prices. Over time, this imbalance will threaten their ability to pay claims for everyone and ultimately, the sustainability of the business. In other words, ongoing disclosure of facts that may influence the insurers price, terms or acceptance of the risk, is a cornerstone of insurance and this is why the insurance consequences for non disclosure are so severe (claim rejections).

Four Essential Insurance Checks

Before any cross border risk exposure or journey, whether to Mozambique or any other country, four essential insurance checks are necessary:

First, a critical reminder that SASRIA cover does not extend beyond South Africa. This means your protection against riot, strike and civil commotion needs separate consideration for any international travel or risk beyond our borders.

Second, confirm if your destination or area of operation is an automatically covered territory. While Mozambique is included in many South African policies, this isn’t universal – each policy is different. Territories that are not automatically covered require specific endorsement (providing insurers are willing to cover you in those jurisdictions) and certain sections of the policy may have different territorial limits. Be clear on the type of insurance cover required – e.g. is it for an asset, is it for legal liability to third parties, aka liability insurance etc.? Liability insurance cover is usually worldwide, but again, don’t assume, check your cover.

Third, verify your Riot & Strike cover for international travel within insured Sub-Saharan African territories. This is often available either as an automatic extension or as an add-on, but you need to know which applies to your policy. Outside of Sub-Saharan Africa, Riot & Strike (worldwide Riot Wrap) cover is more difficult to obtain. It is specialized insurance and is facilitated on request only.

Fourth, Travel insurance is usually prearranged in advance and insurers typically will only issue the policy once they know your travel itinerary, so this is less complex from a jurisdiction standpoint. However, risk changes daily, so even if you have prearranged travel insurance, make sure you monitor travel warnings, especially if any government issues advisories, cautioning against travel to an area, as you would then not only be putting yourself in harms way, but also risking insurers rejecting your loss, based on a lack of reasonable care (to avoid risky situations).

What To Do

• Here is what you should do before any international journey or when you plan on operating outside of South Africa:
• Contact our office or your broker well before your planned departure or venture
• Specifically ask about territorial coverage for your risk or destination, including Travel, Asset and Liability insurance
• Check whether your Riot & Strike cover extends beyond South Africa
• Disclose full details of your risk and travel plans (Disclosure is an ongoing duty)
• Wait for Chadwicks written confirmation before proceeding
• Take all reasonable precautions to avoid loss (taking Reasonable Care is an ongoing duty)

By combining making your insurer is aware of increased risk (disclosure), acting as if you were not insured (reasonable care) and arranging appropriate insurance cover (risk management), you can better prepare for potential risk challenges while operating outside the RSA or traveling to areas with known high risk issues, like unrest.