Recently, some hotels have been having difficulty securing insurance coverage. This is because we have seen drastic changes within the commercial insurance market over the last year.
Prior to 2020, we had a long period of “soft market” conditions, which meant there was high capacity and relatively flexible underwriting criteria. New carriers or programs tend to enter the marketplace during these periods, which provide customers with a variety of coverage options and carriers to choose from. These conditions allow most businesses to get coverage fairly easily, and often mean lower premiums for clients.
Now we are in a “hard market,” which means that insurers do not earn as much profit from businesses. This is happening because there has been an increase in the number and severity of claims, along with new claims risks such as cyber-attacks. As a result, insurers have been restricting their underwriting criteria and are less inclined to take on new risks, and some insurers have decided not to insure particular industries at all anymore. At the same time, there are fewer companies participating in insurance programs because of mergers, acquisitions, and the solvency of small players.
With lower capacity in the insurance market and more restrictive underwriting criteria, this challenging market may continue for the foreseeable future. Unfortunately, this shift has left many Canadian businesses struggling to secure insurance, or with significant rate increases at renewal.
The Hospitality Industry
Insurers have traditionally regarded hospitality as potentially a high-risk industry, partly because of the risk level of large liquor liability claims. With a reduction in appetite to take on higher risk policies, several insurance companies have made strategic decisions to no longer provide coverage for Canada’s hospitality industry.
In response, Western Financial Group has created a new Hospitality Insurance Portfolio (HIP) Program. The HIP Portfolio Program offers its qualifying members a stable and healthy insurance solution in challenging times. Given the current situation, adopting risk management strategies is more important than ever. The Portfolio Program will use in-depth, on-site reviews and evolving industry practices to provide members with tailored risk management seminars, materials, and strategies. These innovative and proactive risk management policies and procedures will help members reduce losses and positively impact their insurance coverage. As ever, policies are tailored to participating members’ varying insurance needs and requirements.
We remain committed to partnering with the hospitality industry and the Alberta Hotel & Lodging Association.
Addressing the Hospitality Insurance Crisis (video by Dave Kaiser, AHLA President & CEO)