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INDUSTRY ENGAGEMENT
with Damian Steele
THE CHALLENGE OF INSURANCE
INSURANCE HAS LONG BEEN A BUG BEAR FOR HOTELIERS IN THE QUEENSLAND HOSPITALITY INDUSTRY.
QHA REVIEW | 48
Many hotel owners have been forced to self-insure
a significant portion of their risk, largely as a way
to contain the high cost of insurance. This strategy
leaves hoteliers in a precarious position: a fire or storm
could result in a significant financial loss. This risk is
heightened by the fact that we are in an industry where
claims do occur. Think of the Kandanga Hotel (2015),
Morven Hotel (2016), or more recently the Archer Hotel
(2018).
Unfortunately the general insurance market is in
a hardening phase, characterised by increasing
premiums, higher excesses, and reduced capacity.
The number of Insurers catering to the hospitality
industry is also on the decline, with key players
reducing their exposure to hospitality, or removing
themselves all together. Many regional timber pubs
are now struggling to find any cover at all. All things
considered, the situation is fairly grim.
There is a small silver lining for hoteliers prepared to
invest time into managing their insurance. Despite the
tough market conditions, there are still opportunities to
get the right cover at the right price with the remaining
insurers, and with new insurers entering the market.
Here is what hoteliers can do to grasp this opportunity:
The Power of Information
Insurers can still be commercial, but they need to
have a very clear picture of the risk they are insuring
if they are going to play ball. Detailed information
on fire protection, security, cash handling, building
construction and kitchen filters can create a strong
underwriting submission that will help get the best out
of the market.
Taking this a step further, independent building
surveys and risk reports can be extremely helpful in
demonstrating to an Insurer that your business is
serious about risk management. This does come as an
upfront cost, but more often than not this cost will be
offset by better premium outcomes.
Start the Renewal Process Early
Gone are the days of waiting until the last minute
before your policy expires to get your new quotes
through. More information requires more time. If your
broker hasn’t been in touch two months prior to your
renewal date, you will already be behind the eight-ball.
Starting renewal early also allows for more negotiation
time with prospective insurers, and in some cases a
direct meeting between yourself and the insurer to
encourage final premium adjustments.
Deal with an Industry Specialist
There are potential insurers entering and leaving the
Queensland Hospitality market on a frequent basis. If
your broker isn’t across everyone with capacity, you
may be missing out on a better deal. Make sure your
broker has experience in the hospitality sector, and the
capability to access all markets in Lloyds of London.
QHA members wanting further information or options
with their insurance are encouraged to contact the
QHA for referral to our corporate partners with hotel
insurance expertise.
Source acknowledgment:
Special thanks to Charles Galayini from QHA Bronze
Corporate Partners GSA Insurance for his assistance
with this article.