This is the second part of a two part story. Read the first part here.
Other growing exposures
Other emerging risks in hospitality center around the rise in hospitality businesses that create their own valet parking, endorse or promote particular ride services, or introducing other ancillary operations in efforts to distinguish themselves from their competitors.
“These all bring new risk exposures that are important to review with your client and make sure that their new services are contemplated for coverage under their current policy,” Skender says.
La’Troya McKinney, commercial lines supervisor at Abram Interstate, believes training of hospitality employees on proper liquor procedures is the greatest undervalued exposure.
“Employers aren’t training their employees on the importance of checking IDs properly and knowing when to cut people off [from service of alcohol],” McKinney says. “A lot of times, the owner thinks their liquor liability stops when the customer leaves their premises, not knowing that there’s a long tail exposure on liquor liability when the customer is overserved.”
Another issue confronting hospitality today is the rise of the sharing economy – specifically the ever-increasing popularity ofhome-sharing companies such as Airbnb.
“This model has definitely had an impact on the hospitality industry,” Poucher says, adding that the cost-cutting exercises hotels may undertake in response to the heightened level of competition could result in greater levels of exposure, particular in areas such as general liability, employment practices liability and cyber.
McKinney also says hospitality businesses need to be concerned with third-party exposures associated with EPL.
“It’s not just training the management against sexual harassment,” she says. “It’s training the employees against sexual harassment of each other, sexual harassment of customers and vice versa.”
In addition, McKinney says underinsurance is a major problem in the hospitality industry. “[Hospitality businesses] don’t fully capture their full exposure when they’re
looking at their insurance value,” she says. “They only look at hard costs, bigger items, but not so much at how much it will cost to replace the other things that they may take for granted.”
Leahy mentions the difficulties encountered in packaging appropriate coverages for hospitality businesses together.
“Many of the hospitality clients that I come across prefer to have all of their coverages on one policy if possible. This would normally include the casualty, liquor and property coverages,” she says. “It’s becoming extremely difficult to find a carrier who is willing to write all of these lines on one policy at a competitive price. More often than not, we have to break up the policy into multiple policies, which the insureds can find a bit confusing.”
Leahy adds that specific coverages, such as assault and battery, are also becoming difficult to find. “If the insured is running a nightclub, it can be nearly impossible to find this coverage at a substantial limit.”
How brokers can help
Poucher reiterates the important role a broker can play in ensuring that clients have proper training around the hospitality industry’s biggest risks, including cyber and liquor liability.
“[Another] thing that we think that they should train on is ensuring [clients] have adequate payroll and timekeeping systems,” he says. “This affects EPL, obviously.”
Leahy reiterates the importance of training around liquor liability, which can affect a client’s ability to get coverage. “The biggest concern in risk management, that brokers should be assisting their clients with are alcohol controls and staff training for the team members,” she says. “Once an account incurs a loss from overserving or serving a minor, it makes placing coverage for the client extremely difficult. Many carriers are not interested in offering coverage for an insured who has displayed a lack of training or procedures in this area.”
Skender talks about the importance of getting to know the client’s establishment more intimately to provide targeted advice. “See what the world sees about them on
Facebook, Yelp, Google, as well as other social media and online promotions,” she says.
Contemplating times ahead, Leahy says, “I expect to see our carriers tightening up even more, as it seems like the loss frequency for these types of accounts keeps increasing. I’m sure we will come across more carriers pulling out of certain states and lines of business due to amount of claims, while we will also have some newcomers willing to take on the business. Pricing is going to continue to skyrocket as the market remains in flux.”