The market for placing liability insurance for hospitality & leisure businesses continues to significantly harden. Underwriting Agencies, generally backed by Lloyds syndicates, have been the traditional home for these speciality occupations for a decade or more. Over the course of the past 12 months we have seen several agencies either loose binder arrangements or have their appetite & capacities significantly curtailed. This is on top of significant rate increases over the same period. Certain segments of the Hospitality & Leisure space are really at the pointy end of the hard market.
One of the real difficulties in approaching some of the risks, particularly in the leisure sector, is that we are dealing with multiple exposures on any single risks. For a mechanical amusement ride operator for instance, you not only have significant vertical exposures for catastrophic ride failure, there is also the attritional exposures to large footfall numbers when these rides are set up at large agricultural shows or carnivals.
It is fair to say that the underlying loss history has finally caught up with the underwriting in many areas. Some of the leisure activities that will continue to be under pressure & very difficult to place are as follows:
- Go-Kart operators
- Jet Ski operators
- Waterslide operators
- Large mechanical amusement device operators
- Climbing Centre
- Any trampoline exposed risks
- Significantly claims effected accounts of any type
Similarly, on the hospitality side of things the following risks will continue to be a challenge:
- Large licensed club/RSL risks
- Live music venues
The reality is, that many of the above occupations have run, for multiple underwriting years, at triple digit loss ratios, and the market is finding it difficult to approach these risks at any price. From an underwriting perspective, risk selection is the critical part of analysing exposures & allocating capacity. Having said that, and as usual, there should always be a home for the best operators in both the hospitality & leisure industries.
A detailed broker/underwriting submission will always be the best way to articulate the Insured’s business, including the following:
- Detailed description of the insureds activities
- Copies of standard operating & risk management procedures
- Exposure analysis & mitigation statement
- Claims history on Insurer letterhead for at least 5 years (but longer is better)
- Detailed description of any major claims and mitigation efforts
Ultimately, for some of the more difficult risks mentioned above, the placement will more than likely end up moving from binders to the open market. The ability to place them will come down to the amount of information we receive and how well the risk is explained.
As always, beyond underwriting the risk, we at Pen are always happy to have a discussion about individual risks & occupations before we see a slip. Given our expertise in these sectors, we are often able to give practical placement advice and if we cannot write the risk, we generally might know who can. Please give any member of the Pen Hospitality & Leisure team a call at any time.
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