Better Business is Everybody’s Business

Legal Aspects of Insurance and Litigation – The Guides Responsibilities – Tim Ross, JMD Ross Insurance Brokers 
Why Risk first?
Because it is usually when there is a failure in the management of risk that bodily injury or damage to property occurs. Once bodily injury or damage to property occurs it is the trigger for a Public Liability insurance policy to respond. 

When making reference to the word Insurance in regard to “Risk & Insurance” I will be referring mainly to Public Liability insurance as this is the main exposure facing Tour Guides in their day to day business. 

The other insurance which comes into play for overseas visitors is Travel insurance which is there to provide protection for the traveller. So in effect there are two insurance policies which provide protection to the traveller – one paid for by the Tour Guide or their employer and the other paid for by the traveller themselves. 

Going back to risk and risk management, I think it is worthwhile to go over some of the major activities of Tour Guides and from my experience the role of the Tour Guide is both varied and complex. 

Professional Tour Guides must possess skills in many areas such as: 

Human and managerial skills required to lead the group
Provide and construct tour commentary
Arrange detailed Itinerary schedules
Detailed knowledge of tourism facilities, history, local economy, culture, Government and geography
Resolve potential conflicts and deal with difficult tour members
Correctly judge and attend to the needs of sick passengers
Demonstrate sensitivity and tolerance to all group members
Manage operational matters such as confirmations / re-confirmations, ticketing, sale of options and baggage
Ability to make independent decisions as necessary when there are unforeseen circumstances such as breakdowns, delay, strikes and illness.

It has been shown on countless occasions that a Tour Guide is invaluable at the time of disaster and in summary it is the quality of Tour Guides that is a major factor in the success of destinations. 

Whether a guide is involved in an Outback Harley Davidson tour, camel riding in the Northern Territory, a tour around Melbourne or nearby Werribee Park Mansion. 

Perhaps it is surfing at Bondi Beach in Sydney or just enjoying a canoe tour to watch the whales at close quarters… 

Risk is evident in all these activities. 

In the clip we just saw which showed a whale jumping out of the water and landing on one of the canoes, where was the tour guide? Were they still on the shore? Did they provide details of the tour before they set off? Did they listen carefully to the safety control measures described by the tour operator? Do they understand their responsibilities and more particularly the risks involved? 

Whilst I am not aware if anyone suffered a serious injury in this instance or whether anyone was sued for negligence we would hope that the basic risk management principles were followed. 

These principles are: 


Risk management and safety are vitally important to any business or activity because in essence it is the right thing to do. Safety is about ethical practice and a culture of safety ensures quality. Take our national airline, Qantas, for example. They have a reputation for safety and because the general public is aware of that reputation they will more readily travel on that airline. 

An example of the failure of a risk management plan is the Swiss Canyoning disaster. There was a trial following this tragedy and three directors of the tour operator were found guilty “because they had not ordered a risk analysis and had not banned canyoning during storms” the trial Judge said. As well as the loss of life of the eighteen tourists, three guides also lost their lives. 

One of the survivors, a twenty one year old Australian girl, recalled the day saying “It was raining and there was lightning as we drove up to the canyon. There were four groups and we were the first group to go in. By the time we were in the canyon, it was raining hard and it was very dark. I didn’t have any idea what canyoning was – a lot of people had no idea what it was. It just sounded fun. We were just trusting our guides”. 

As previously mentioned in this case there was no risk analysis so what type of analysis should be carried? 

Site and Activity risk assessment checklist 

This checklist is used to identify the risks inherent to particular sites and activities. It provides a structure against which the hazards and risks associated with specific sites and activities can be identified, evaluated and reduced. It assists in being able to “drill down” into the details of the site and activity. 

For example, if the activity is to take a group to the Melbourne Museum, there are a number of hazards we can identify. The obvious hazard is participants getting lost in the Museum. The likelihood is dependent on the mental health state and cognitive ability of participants. If they are known to wander off then the likelihood is almost certain or likely. Of course the consequences of getting lost in the Museum are insignificant or minor. 

There are other, less obvious hazards to consider. What if a member of the group gets scolded by security personnel for touching something or smoking inside the building? What if a participant becomes noisy and agitated? What if they are evicted for socially unacceptable behaviour or behaviour that simply does not match the etiquette required within a museum? What is the likelihood of such incidents? How upsetting (both short and long term) would the consequences be for the participant and/or the group? There have been instances where groups have been banned from attending in future because one member of a group behaving unacceptably. Such consequences impact not just on its clients but also on the organisation. And while they may not always have safety implications they do impact upon service quality. 

Another more obvious example that we can use to illustrate the Site and Activity risk assessment checklist, is taking a group to a beach. Here there are a number of hazards we can easily identify. One major hazard is deep water; the risk is drowning (or nearly drowning). The likelihood is dependent upon the swimming abilities of participants – if they can all swim quite well then the likelihood is unlikely or rare. Of course, the consequences of drowning or near drowning are catastrophic. However the control measures may be quite simple – make sure you go to a patrolled beach, ensure you have appropriate surf-lifesaving qualifications and that participants are supervised at all times. 

Another hazard, often overlooked, is the sun and the risk is sunburn or sunstroke. It is worthwhile remembering that some psychotropic medications make people more susceptible to sunburn. The likelihood is of course dependent on the time of year and the weather on the day. 

The consequences can range from minor to major but of course the control measures are simple and are well known to Australians as a result of much advertising on television and radio – SLIP, SLOP, SLAP. Slip on a long-sleeved T-Shirt, Slop on some sunscreen and Slap on a hat! 

These couple of examples demonstrate that a checklist has application across a range of activities and also we wish to emphasise that planning for an activity that may seem very low-risk and mundane benefits equally from the use of such a checklist. There are lots of activities that may seem straightforward but where the combination of participants’ lack of familiarity with an activity, issues arising out of group dynamics and unforeseen hazards may lead to an explosive situation. In my experience Public Liability claims arise when there is a series of events which occur, none of which were foreseen and they all happen together. 

All of this underlines the importance of thinking through and being prepared for the “what ifs” so that you can minimize their occurrence. 

You should do it because you have a commitment to running high quality programs. Also you should do it because you have a Duty of Care. 

Duty of Care is a legal concept that is often bandied around however in our experience too often not fully understood so I would like to take this opportunity to explain it a little further. 

Duty of Care can be defined as “the obligation owed to anyone whom it is reasonably foreseeable would be injured by the lack of care of that person. The duty is breached if the defendant fails to act in accordance with the required standard of care. 

The level of Duty of Care may vary depending upon: 

The type of activity The age of the participant The ability/skill of the participant The guides level of training and experience 

Of course the majority of people who breach their Duty of Care do not do so deliberately; rather, such breaches often occur due to negligence. An allegation of negligence is the most common legal problem a guide is likely to face. Negligence can be defined as “an action in tort law, the elements of which are: the existence of a duty of care; breach of that duty; and material damage as a consequence of the breach of duty. A duty of care is a legal obligation to avoid causing harm, and arises where harm is foreseeable if due care is not taken. The defendant breaches this duty if he or she fails to avoid the risk where a reasonable person would have done so. 

Normally people are cleared of negligence if it can be shown that they acted in accordance with industry common practice and due care. However, if the common practice itself is shown to be negligent, there may be a different outcome. 

If the general practice, upon investigation, can be shown not to contain an objective reasonable standard of safety and care, there is no defence against a charge of negligence. The relevance of this point is that all guides commencing a program activity should not merely rely on “established” safety procedures but should evaluate those procedures based on their own skill and knowledge and accepted codes and standards of the industry. 

Guides should not continue to implement unsafe practices just because they have “always been done that way”. In other words check out what policies and procedures your employer has in place to deal with safety issues. Do not let complacency creep into your workplace. 

If you can see that a supplier has not implemented a risk management program or at the very least identified the risks then be very wary as it may well be the guide who bears the consequences. Don’t accept shoddy risk management practices and remember that all insurance policies are conditional contracts. They are not designed to cover every contingency. 

In summary the key messages are: 

Implement thorough safety practices because it is the right and ethical thing to do, not because you want to stay out of a court of law 

Use a clear and easily understood framework to identify and minimize the risks 

Leave a paper trail that you can refer back to and that others can follow 

Don’t overlook the obvious and plan for the “what ifs” 

As risk and insurance are undeniably tied this now leads us to the area of Insurance which is really the bottom rung on the risk management ladder, Risk Transfer. Previously we mentioned Risk Transfer and in general terms once you have identified and evaluated risks, the next step is to minimize or reduce the risk. This then leaves us with some risk as in most cases you cannot eliminate it all. Thus it is this remaining risk which is transferred to an insurance company and there is a cost to this, the premium. Also this is where we as Insurance Brokers come in. We facilitate the transfer of risk as the intermediary between the insured person and the insurance company. 

At the start of this talk I mentioned that there were, in effect, two policies of insurance which provide protection for the traveler; Public Liability insurance and Travel insurance. 

Most travellers or at least seventy percent of them on average globally take out Travel insurance in their own country before they leave for their overseas travel. This leaves on average thirty percent of travellers with no Travel insurance and only the Tour Guides Public Liability insurance to provide them some protection. Also available may be the Public Liability insurance of the Inbound Operator, the Tour Operator or another supplier. The main point being that there is a body of travellers who, in the event of injury or damage, have no other choice than to try and recover costs from guides or other sections of the tourism industry. 

To explain how a Public Liability insurance policy operates we should start at the beginning. That is we need to start with the Operative Clause of the policy which is what I call the “guts” of the policy. 

Globally Public Liability insurance policies are all very similar and the Operative Clause provides indemnity for: 

“Legal liability for Bodily Injury and/or Damage to Property arising from an accident and happening in connection with the business of tour guiding” 

This in point form there must be: 

Legal Liability – liability at law must be established. Injury or Damage – which includes death and loss. An accident or occurrence. Resulting from the business of Tour Guiding. 

Having established how a Public Liability will respond there are also policy exclusions. It used to be said of an insurance policy that the BIG PRINT “giveth” and the small print “taketh away”. Fortunately that feeling has all but disappeared today with insurance companies being much more regulated in terms of denying claims mainly as a result of consumer legislation. 

The major exclusions in a standard Public Liability insurance are interesting because some of then relate to areas which are critical to the operations of a tour guide as well as being integral operations of the Tourism Industry at large. 

The exclusions I refer to are particularly where the policies exclude liability arising out of the ownership, maintenance, operation or use of: 

Watercraft greater than 8 metres

Motor vehicles
As mentioned previously an insurance policy or contract is a conditional contract and among the conditions are these exclusions. Whilst they have particular impact in the tourism industry they are specifically excluded because they are meant to be insured under other insurance policies. For instance, when aircraft are being insured a policy is arranged for the hull and the liability exposure is generally insured with it. The insurance industry being aware that separate insurance is arranged they exclude the cover from a Public Liability policy. It is the same for watercraft over 8 metres in length and motor vehicle where the risk of third party injury is usually covered by an insurance policy that the motor vehicle owner arranges when registering the vehicle each year. 

Other factors in regard to Public Liability Insurance are the limit of liability or sum insured and the rating factors which determine the premium cost. 

With Public Liability insurance generally the limit of liability is on a “per occurrence” or “per accident” basis. So, if you effect a policy with a limit of, say, $5,000,000 you have protection for $5,000,000 any one occurrence and unlimited in the aggregate. Thus should there be an accident and a number of members of a group make a claim the maximum for all claimants under the policy is $5,000,000. 

Say there were 20 in the group then the average maximum claim is $250,000 for each person. Of course if they make successful claims for $300,000 each then the extra $1,000,000 would have to come from the defendant’s (tour guide’s) own pocket. 

Our philosophy is that we believe the capacity of a person or company to bear a large loss is not increased or diminished by the probability of its occurrence. It is the role of insurance to cover the remote but potentially expensive contingency. 

In conclusion Tourism and Hospitality is the fastest growing industry in the world and from all indications this global phenomenon is going to continue well into this century. 

Tourism, once the privilege of the wealthy, is becoming available to more people than ever before. The industry is poised to prosper and at the same time helping travellers gain a new, deeper understanding of their world. 

Imagine you young, Chinese and in search of new thrills. Your country’s supercharged economy means easier access to money. And it’s more relaxed politics means a passport is on offer. But where to go to spend the new found wealth. There are so many countries drooling over the China market according to the World Travel and Tourism Council. The future potential is vast. Mainland China represents an untapped market of 1.3billion would-be travellers. China, teamed with India, are going to provide huge numbers of travellers and the forecasters couldn’t agree more. The World Tourism Organisation believes that by 2020 international arrivals will hit 1.5billion which is about double today’s total arrivals. 

Already the tourism map is being redrawn: new money and opportunities are changing old patters. Russian skiers now crowd the slopes of some of Europe’s best known alpine resorts. Middle Easterners are heading for the relatively new upmarket resorts in the Gulf. The big name hotel groups are expanding. 

Tastes are also set to change as the world opens up. Many travellers may forego their standard annual holidays such as the beach holidays in Greece or Italy now that they can use the internet to create more unusual vacations such as, a rodeo in Texas, bungee jumping in New Zealand or swimming with the dolphins. Should they wish to also try a kayak tour to see the whales up close I am sure their guide will tell them it can be a dangerous activity as we have seen. 

I think that to meet the challenges of these increased overseas visitors we all need to rely on further and improved education and training. 

Governments are already instituting industry standards in consultation with industry and it behoves the guiding sector of the industry to be proactive which will lead to stronger risk management. At the end of the day I may be out of a job when all the risk is managed and there is none left for me to transfer. 

Strength to your arm!