Thatch Roofs Under Pressure

Why South Africa's Hospitality Industry Needs a New Approach to Risk

For decades, the iconic thatch roof has been synonymous with South Africa's hospitality industry. From luxury safari lodges and bush retreats to country guesthouses and entertainment lapas, thatch has become part of the authentic African experience that both local and international travellers have come to expect.

Today, however, that same architectural feature is becoming one of the hospitality sector's greatest insurance challenges. A combination of increasing fire losses, changing climate conditions and tighter global reinsurance markets has fundamentally altered how insurers assess thatch roofed properties. As a result, many hospitality businesses are experiencing significant premium increases, higher deductibles and stricter underwriting requirements.

"Over the last few years, we've seen a pronounced tightening in appetite for hospitality thatch risks," says Cecil Madziwa, Commercial Client Manager at Aon South Africa. "Several insurers have reduced their capacity or withdrawn from this segment entirely. That leaves fewer markets competing for these risks, which has pushed premiums up and, in some cases, led to very challenging renewal terms."

A Changing Risk Landscape

While thatch has always carried a higher fire risk, the operating environment has changed significantly over the past decade. More severe droughts, longer dry seasons and frequent veld fires, intensified by climate change[1], have increased the likelihood and severity of fires spreading to hospitality properties.

Insurers have also recorded major fire losses at thatch-roofed properties, including lightning-related incidents at high-end lodges. “Even when buildings are not destroyed, the financial impact often extends well beyond structural repairs. Business interruption, guest relocations, cancellations, reputational damage and specialist rebuilding costs can far exceed the initial fire damage,” Madziwa explains.

These trends also affect global reinsurers, which provide much of the capacity behind local insurance markets. Their caution has reduced underwriting capacity and contributed to higher premiums. In practice, this means that insurers now assess the property as a whole, rather than each structure separately. As a result, even one lapa, entertainment area or outbuilding with a thatch, reed or tile over thatch roof can affect how the entire risk is priced.

Factors commonly assessed include:

·       The distance between thatched buildings and neighbouring structures.

·       The amount of surrounding vegetation and proximity to open veld.

·       The proportion of the property's total roof area that consists of thatch.

·       Existing fire prevention, detection and suppression systems.

·       Lightning protection measures and overall site maintenance.

Risk Management is Becoming the Difference

Insurance secured based on appearance and occupancy of a property are rapidly being replaced by insurers expecting businesses to demonstrate proactive risk management before offering favourable terms. “Measures such as well-maintained fire breaks, vegetation management, compliant lightning protection systems and comprehensive emergency response planning have become increasingly important. Larger hospitality operations may also be expected to install dedicated fire water storage, sprinkler systems or fixed suppression systems,” Madziwa explains.

These investments, however, come at a considerable cost to the hospitality sector as it continues to recover from the financial impact of the COVID-19 pandemic and ongoing economic pressures. “It creates difficult commercial decisions between investing in additional protection, accepting higher insurance costs or retaining more risk within the business,” says Madziwa.

Exploring Alternative Risk Solutions

As traditional insurance becomes more restrictive, many hospitality operators are beginning to explore different approaches to managing their risk.

“Some are investigating fibre thatch and alternative roofing systems that retain the visual appeal of traditional thatch while potentially improving fire performance. However, insurers remain cautious until sufficient local performance data and independent combustibility testing are available for specific products and installation methods,” Madziwa explains.

Others are considering alternative approaches to financing risk. Higher deductibles, self-insurance and alternative risk financing structures are increasingly becoming part of discussions for larger hospitality businesses seeking greater flexibility as insurance market conditions evolve.

Building Long-Term Insurability

For larger hospitality portfolios, limited local capacity has also pushed some risks into international markets, particularly London. While this can open access to additional capacity, it often comes with significantly higher deductibles, stricter underwriting requirements and more demanding risk engineering expectations.

According to Madziwa, the conversation has shifted from simply buying insurance to demonstrating why a property remains a quality, insurable risk. “With the right data and meaningful risk improvements, insurers do still want to support well-managed hospitality businesses,” he says. “As South Africa’s hospitality industry continues to attract visitors seeking authentic safari and bush experiences, thatch roofing is unlikely to disappear. The businesses best positioned for the future will be those that invest proactively in fire prevention, strengthen their risk management practices and work closely with specialist insurance advisers to secure sustainable insurance solutions in an increasingly challenging market,” Madziwa concludes.