September 1, 2020 by Greg Meckbach
If you are finding it difficult to place business interruption insurance for restaurants, hotels and event venues, you aren’t alone.
Aurora Underwriting Services Inc., an Alberta-based managing general agent and Lloyd’s coverholder, is still placing insurance for restaurants, company owner Nona McCreedy told Canadian Underwriter Monday. But she cannot find a Lloyd’s syndicate who will cover business interruption for any client in the hospitality sectors – even with a pandemic exclusion. This includes restaurants, hotels, motels, convention centres and event venues.
McCreedy’s main point is that MGAs play a critical role in helping retail brokers; and they are absolutely necessary in today’s commercial insurance marketplace.
MGAs are now helping retail brokers navigate through “a market that suddenly does not want to write restaurants,” said McCreedy.
“Retail brokers are spending a great deal of their time just calling around seeing who is doing what and that can change almost hourly,” she said. “I talk to probably four or five MGAs a day. We all stay in touch with each other, and we know who’s writing what so we can refer brokers to each other. And we say, ‘Last week, so-and-so was writing these. Maybe he can help you. Give them a call.’”
One reason for the lack of availability of BI coverage in hospitality seems to be based on coverage disputes arising from the pandemic, McCreedy suggested. Many clients in Canada and the United States have sued their insurers alleging breach of contract.
Moreover, some state legislatures in the United States, including Ohio and New Jersey, were considering legislation that would require insurers in their state to pay business interruption claims even if the terms of those policies did not provide coverage.
These developments caused concern for many Lloyd’s syndicates, because they were concerned about what would happen to the industry if insurers had to pay all business interruption claims arising from the COVID-19 pandemic, suggested McCreedy.
“Within three months, there would be no insurance industry worldwide, because there was more to be paid out than was ever in the pot,” she said. “Their concern, I think, was that if one judge let that go through, then it could start a chain reaction and cause problems.”
The upshot of that uncertainty is that McCreedy does not know of any syndicates writing business interruption in hospitality. “I can’t get business interruption for any hospitality and that includes hotels, motels, restaurants, anything like that.”
Feature image via iStock.com/marcoventuriniautieri
I wouldn’t write a piece of business if I couldn’t offer BI.
I’ve always found Aurora as an MGA that gets negatively selected against as they won’t even quote business unless it’s on their application, and their applications are not user friendly. What ends up happening is brokers only bring them business when nobody else wants it and options are limited.
A better approach would be to quote from any application, provided it has the information required, and make binding subject to receipt of their application, if their Underwriters require this.
Insurer/MGA applications need to be reviewed and updated regularly to ensure they are easy to read & user friendly (fillable PDF). Most markets haven’t realized the importance of applications.
Canadian Underwriter is irresponsible to print an article that it has not verified. MGA’s that represent individual syndicates have no right or authority to speak for Lloyds of London or other coverholder business capabilities. As a Lloyds coverholder, I have full capabilities of providing Business Interruption coverage with any risk if it deemed acceptable to our Underwriting standards. Irresponsible reporting and “talking” creates unnecessary concerns at the broker/consumer level. Mark Woodall, President and CEO,Special Risk Insurance Managers Ltd