21 September 2020
In a market where premium rates are starting to increase, Verlingue's Hospitality team discuss the policy changes making an appearance and how they may impact your business.
- Covid-19 and Disease Exclusions
- The Potential for Personal Injury Claims
- Reduced Insurance Capacity
Covid-19 and Disease Exclusions
We have seen a variety of amendments to wordings in respect of disease as a result of Covid 19. Some are looking to exclude disease across the entire policy and some are amending specific sections only (for example the non-damage denial of access extension).
It is a legal requirement to hold Employers Liability Insurance in the UK which prevents Insurers applying exclusions to any part of this cover. Instead they are sending out questionnaires to ensure the right precautions are taken before they accept the risk.
It’s something to consider and certainly to check whether you’re staying with the same provider or looking to move.
The chances are they will all vary slightly and will unlikely be the same as before.
The Potential for Personal Injury Claims in the Hospitality Sector
There’s an apprehension around Covid-19 and where the next wave of claims will manifest. There’s an argument to suggest that there will be an influx of personal injury claims from employees and/or members of the public contracting the virus at work or in someone else’s premises. There is also the impact on mental health and wellbeing. The hospitality trade is especially vulnerable to this. As a result insurers are having to manage the public liability losses by either excluding cover (as discussed above) or introducing an increased excess.
Reduced Insurance Capacity
A combination of large property claims, loss of markets (such as Aspen, Tokio Marine and some Lloyds syndicates) and the resultant accumulation has resulted in a reduction in capacity, particularly for property. Where in the past it was most likely that a single insurer would
carry 100% of the risk for a large property they are now only looking to take a proportion (often less than 50%) This means that two or more markets need to be found to cover one risk which has a knock on effect on rates. All of this can be time consuming and as such the renewal process needs to begin further in advance than before.
In addition to scenarios already covered there are several areas that have brewed up the perfect storm for rate increases including:
- Losses for investors as interest rates reduced (pushing lower in response to Covid)
- Post Grenfell focus on building materials and fire protections
- Insurers are having to hold additional capital to meet claims reserves which is impacted by Solvency II requirements, the impact of the increased Ogden discount rate and general claims inflation
- Climate change. Trends in the UK seeing larger flood risks to all areas, for example storm Ciara and Dennis cost the market £500m
- Reinsurance treaty renewals are resulting in insurers having to pay higher premiums to reinsure themselves.
The Importance of Working with your Insurance Broker
As a broker we are working hard to manage clients expectations in terms of renewal premiums and market limitations. It’s never been more important to work with a broker who understands your sector and has access to markets.
How Verlingue can Help Hospitality Businesses
John O'Hara and Rebecca Webster are leading insurance specialists in the hospitality sector. If you'd like some advice on your insurance programme or have any questions in regard to this article please don't hesitate to get in touch.