What to do when restaurant and hotel clients can’t find coverage
August 20, 2021 by Greg Meckbach
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Commercial brokers wanting to place coverage for restaurants and hotels need to understand how those clients were affected by the pandemic and make the best case on their risk profile to carriers, says the CEO of Insurance Brokers Association of Saskatchewan.
During the pandemic, some Saskatchewan brokers have been “having some very, very difficult conversations with clients who weren’t able to pay their premiums, weren’t able to find coverages in an especially hard market,” IBAS CEO Derek Lothian said Aug. 18 in an interview.
Separately, brokers and managing general agents have told Canadian Underwriter that some insurers are no longer covering restaurants, hotels, motels and event venues.
A broker has to do a good job understanding how the pandemic has affected individual clients and make the best case for those clients when taking their risk to market, said Lothian.
“You had folks that literally couldn’t open their doors for months at a time. Combine that with premiums that were going up 30%, 60% or more,” Lothian said of the hospitality sector.
Many carriers no longer offered coverage, leaving the broker and customer not able to find new coverage.
Lothian was interviewed about the importance, for brokers, of community involvement. In a lot of cases, brokers budgeted marketing money for events that were not able to go forward.
For its part, IBAS launched a campaign in 2021 in which brokers provided funding – of about $45,000 so far this year – to 13 different community organizations in the province to improve mental health outcomes.
On the commercial hospitality front, IBAS worked with the Insurance Bureau of Canada, to pilot a risk management service for the hospitality sector, Lothian said.
In early 2020, IBC announced it would hire a risk manager who could make practical recommendations to condominium corporations to reduce their risk. In late 2020, IBC expanded its risk management advice to the hospitality industry is part of an effort to address the fact that some insurers are withdrawing from the hospitality market and commercial rates are increasing.
One large hotel in Regina was “very near not being able to get insurance,” Lothian told Canadian Underwriter. That hotel was considering closing down but through IBC, the hotel was able to get a second look from an insurer.
“They were able to better translate the situation to insurance carriers” and show the risk was “much more attractive” then an underwriter had perceived, suggested Lothian.
Feature image via iStock.com/Wavebreakmedia
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Continuity of coverage will likely apply to long-term clientele despite rate increases, providing the opportunity to the broker to explain the fundamentals of premiums in, dollars out as can be fed by extreme loss stages. But these classes of risk bear with them the issue of credibility and while that is not always the case, is the idea to underwriting haunted by those insurance buyers whose deficiency of fact blemishes any and all like kind? Where dollars are significant, it would be wise for the buyer to provide a financial report and for the sake of guaranteeing repairs for uninsured losses, a bank line of credit.
If these risks are such that they’re beyond the reach of viability, then it would appear time to borrow from the practice of the Facility for auto insurance a similar program for P&C. With the heavy weight of reluctance to insure, what would be the reason not to?