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SPECIALTY LINES MARKETS Travel, leisure and the hospitality business By Larry G. France The Hospitality market can be characterized as soft and growing, with many choices as to where to place a client’s business. Travel, leisure and hospitality takes in a wide range of classes. Among them are:
Two exposures that most of these risks have in common are slip and fall, and food-borne illnesses. With hotels, motels, timeshares, resorts, restaurants and bars, the risk of a slip and fall is common, both real and planned. Fake slip and falls are somewhat of a cottage industry and must be watched for fraudulent claims. Regardless of whether the location is in a tropical climate or on the slopes of the Rockies, you have water from many sources including rain, swimming pools and spilled beverages. In colder locations, there is ice to contend with. On your next visit, check out the numbers of orange safety cones marking wet spots and even, perhaps, an increase in the numbers of attendants making sure that guests are safe. Animal- or food-borne illness has made the news several times in the past few years. First it was mad cow, next lettuce, followed by chicken, then spinach. Even the pet population is not immune. Recent cat and dog illnesses and deaths have been attributed to the presence of melamine in wheat and rice gluten purchased from China. Professional Liability Insurance Services has been addressing these issues in the restaurant industry since it started in 1997. It then expanded to create a product for the hospitality industry. The stand-alone policy contains the same components of business interruption to address loss of revenue and a 24/7 Immediate Crisis Management as a function of the product. It has been put to use over the past two years as outbreaks spill over into the growing hospitality industry. Pamela J. Ritz, ARM, APHR, CRM, president of Specialty Risk Management, Inc., in Austin, Texas, who heads this program for Lloyd’s of London, says: “Business owners and managers at hotels and water parks are aware of the many unique exposures that face their business daily: weather catastrophes, water-main breaks, guest injuries, and food-borne illness and/or recreational water illnesses like Norovirus, Cyptosporidium, E. coli and a host of others. “But what happens when a large destination hotel starts receiving calls in repeated succession from guests reporting stomach problems? At the same time the HR manager of a large local business notifies the hotel that a growing number of her employees are calling in sick or arriving sick after attending a conference at the hotel. Then, the local health department arrives to undertake an investigation of illness complaints. The hotel staff begins phoning in ill, and an ambulance at the front door evacuates a guest to the hospital in the presence of a number of news crews. Finally the health department closes the hotel until the premises is investigated and cleared to be re-opened.” Bad things happen, and when they do, bad news sometimes spreads more quickly than the outbreak itself. The power of a negative event and the public fear and perceptions created by the media are unique for this industry, according to Ritz. The absence of physical damage to property means that the traditional insurance products which hospitality entities have come to rely upon will not assist in the event of a food-borne illness outbreak. “The temporary closure for an average facility of 500 rooms can easily come to $500,000 to $1 million in revenue losses in a very little time,” says Ritz. “In addition to addressing the revenue interruption and ongoing expenses similar to what a business would enjoy from traditional business insurance after a physical loss, the product provides for immediate crisis management.” Ritz continues: “The need for a comprehensive set of skills in disease expertise, health department interaction, toll-free phone service for customers, cleaning protocols, employee issues, not to mention the additional and immediate assistance controlling the media events and stopping the ultimate business revenue impact to your hospitality location are critical elements of assistance that require an army of expertise during the critical and compressed time periods of dealing with a crisis.” Rob Holt, northeast marketing manager for Willis’s ResortGuard Insurance Program, says that 2006 will go down as one for the record books in the P-C insurance industry, with profits at their highest level in two decades and underwriting results not seen in almost 60 years. The result has been a major increase in competition, driving pricing down. What is a boon for both commercial and consumer insurance buyers has different implications for insurance brokers and agents. “They have to access more markets that ever before,” says Holt. The upside of this is that they can provide a myriad choices and coverages to their clients. This means that other brokers likely also have access to these markets, and this results in strong competition for nearly every piece of business. As one broker put it, “There are four different brokers quoting nine different carriers for one $30,000 piece of business.” Holt continues, “With declining pricing, brokers—with few exceptions— are seeing decreases in commissions across their books. This is not to say that many are not seeing strong results, but the earnings per account certainly are down. Faced with this and the strong competition, many brokers are wondering where to turn for growth. One of the solutions is to look toward new industries. Many are turning to the travel and tourism industry and, more specially, the vacation home and interval ownership segment.” According to Holt, the market for the second home and timeshare segment is growing, with new carriers entering on a regular basis. “Choosing which option is best for your client can be somewhat challenging,” he says. “Price, of course, is a driver in a competitive environment, so that factors as a key component. But what still remains true, especially in this segment, is the need to find a carrier that not only specializes in this type of coverage but is committed to the market. This may mean not choosing the lowest price product, but focusing on the strategy that will pay off for you and the customer,” Holt says. Gary L. Cheldin, president of Crusader Insurance Company, which has operated in California for 22 years, says that during that period of time they have witnessed several changes between “hard” and “soft” market cycles. He believes that today’s market has again cycled into the more competitive, soft environment and that the market is getting softer. “We look at such market cycle changes as the norm and not the cause to deviate from our long-term practice of providing sustainable products and services,” says Cheldin. “Today’s market in California,” he continues, “is the result of many carriers reducing their rates, liberalizing their eligibility guidelines, and introducing new programs and/or new coverage. The emphasis of many insurance carriers apparently has shifted from underwriting profit to market share. “We have underwritten bars, taverns and nightclubs continuously, including coverage for assault and battery and liquor liability claims yet, at the same time, many other companies have entered and abandoned that sector of the hospitality industry.” Crusader currently does not offer earthquake coverage, but it does offer coverage for damage caused by “fire following earthquake,” brushfires and riots. While much of California’s earthquake exposure is underwritten by the state’s pool—the California Earthquake Authority—that coverage is predominantly for residential applications, not commercial risks. To the extent that California has not recently suffered a significant earthquake, the current market capacity to underwrite such risk is relatively high and prices are relatively low, observes Cheldin. Jack Cave, senior partner of Entertainment Brokers International, says: “The leisure market, including timeshares, resorts, and bed and breakfast risk, has a substantial volume of business of renewable accounts that form this business. Taken altogether, this segment of the United States economy continues to expand as most people have a greater amount of free time to enjoy themselves.” Entertainment Brokers International provides a wide variety of coverages and products applicable to this market segment, including GL, auto, umbrella/excess liability, workers compensation, and property. Upcoming specialty market articles will address EPLI in July, the Security Industry in August and Recreation Activities/Pay for Play in September. The following have responded to our survey regarding the Travel/Leisure market and have indicated that they are a market to access. For additional information go to www.insurancemarketplace.com. ADA VIS Global Enterprises, Inc. An agency/GA that operates in most states except for DC, HI, MA, ND, VA, VT and WV with CSL limits of $1 million. Target classes are Mexico insurance, RV insurance (including full-timers) and commercial. All carriers are rated A+. Agency Marketing Services, Inc. An E&S broker operating in FL only with GL limits of $1 million - $2 million and property limits of up to $10 million. Target classes are restaurants (take-out only, fine dining, family style), bars, taverns, nightclubs, adult clubs, caterers, and banquet halls/hotels (small independent, franchise and high-value resorts). Will not write workers comp or commercial auto. Can offer equipment breakdown, liquor liability, umbrella and excess GL. All carriers are A rated. Black/White & Associates Excess and Surplus Lines An MGA operating in CA, IN, KY, MT, NV, OH, OR, SD, TN, UT and WA with GL limits of $1 million/$2 million and property limits of up to $1 million. Target classes are restaurants, bars, casinos, taverns, and gentlemen’s clubs. Can offer crime, fidelity, liquor, inland marine and umbrella. Century Surety and Western Heritage are the carriers. Burns & Wilcox Ltd. An MGA that operates in all states except AK and HI with property limits of $10 million and liability limits of $5 million. Target classes are hotels, restaurants and bars. Can offer liquor liability and umbrella. Scottsdale, USF, Lloyd’s, Colony, Burlington, USLI, and Founders are the carriers. CalSurance, Brown & Brown of CA, Inc. An MGA that operates in all states with the following limits: hotels/resorts, primary GL $1 million/$2 million, excess $50 million; pizza, primary GL $1 million/$2 million, and up to $2 million for non-owned auto for delivery. Target class is national insurance programs for hotels/resorts. Can offer GL, property, auto, workers comp and excess. The A rated carrier is Fireman’s Fund. Capitol Insurance Companies An insurer (contact for state availability) that operates with limits of $1 million/$2 million. Target classes are hotels/motels/restaurants, and bars/taverns. Contact Capitol for classes not written. Can offer liquor liability. Both Capitol Indemnity and Capitol Specialty are A rated carriers. Century Surety Group An insurer that operates in all states except MA with primary limits of $1 million/$2 million and excess limits of $5 million. Target classes are hotels/motels, resorts, nightclubs, restaurants, and bed and breakfasts. Can offer GL and property. Century Surety is an A- rated carrier. Continental/Marmorstein & Malone An E&S broker operating in CT, DE, NJ and PA with primary limits usually at $1 million/$2 million (higher primary limits may be available depending on the risk), plus excess including umbrella. Target classes are hotels/motels, restaurants, bars, nightclubs, bed and breakfasts, and tour guides. Can offer liquor liability, GL, property and special events. Essex, USLI/Mt. Vernon, Nautilus, Western World, Chubb Custom, Colony, and American Empire are the carriers. Crusader Insurance Co. An insurer that operates in CA only with limits of $2 million-plus (property considered) and $1 million/$2 million liability. Target classes are bars/nightclubs, restaurants, microbreweries, and hotels/motels. Will not write loss of income from food-borne illness, Mexico coverage, timeshare/interval ownership ops, vacation insurance (weather), and travel trailer rentals. Can offer liquor legal liability. Crusader is a B++ rated carrier. EIB (Evolution Insurance Brokers) An E&S broker that operates in all states with all limits. Will consider all classes. Can offer monoline liquor/assault and battery/after 3 a.m. closing time. Prime Insurance Syndicate is a B+ rated carrier. Entertainment Brokers International An MGA that operates in all states with statutory limits. Target market is workers comp in resorts, hotels, timeshare/interval ownership operations, bed and breakfasts, and restaurants. Will not write bars, loss of income from food-borne illness, Mexico coverage, vacation insurance (weather), nightclubs, and travel trailer rentals. All carriers are A rated. Excel Insurance Service, Inc. An MGA/E&S broker operating in NJ and PA with limits of $10 million. Target classes are bars, restaurants, clubs, and adult entertainment. All carriers are A rated. Gateway Underwriters Agency An MGA that operates in AR, IA, IL, KS, MO and NE with limits of $1 million. Target classes are bars, restaurants, nightclubs, adult entertainment, and hotels/motels. Will not write 3 a.m. closing in Missouri. USLI, Nautilus, and Western World are the carriers. Gillingham & Associates, Inc. An MGA that operates in all 50 states with liability limits of $1 million ($5 million excess available). Target classes are bed and breakfasts, guest ranches, resorts, lodges, and RV parks/campgrounds. Can offer GL, property, excess liability, liquor liability, commercial auto, inland marine, crime, and business income. The A rated carrier is Arch. H.R. Keller & Co., Inc. An E&S broker/wholesaler operating in NY and PA with limits that vary by company. Will consider any type of restaurant, bar or nightclub exposure (new ventures welcome). Can offer liquor liability, workers comp, DBL and umbrella. Various admitted and nonadmitted carriers are used to place coverage. Insurance Innovators Group An MGA/E&S broker operating in DE, NJ, MD and PA with limits of $1 million/$2 million/$1 million. Can offer umbrella, excess, property, and a GL package. Various carriers are used to place coverage. International Brokerage and Surplus Lines, Inc. An MGA that operates in all states with primary GL and liquor limits of up to $1 million/$2 million (excess available). Target classes are restaurants, bars, and catering. Will not write adult entertainment and discos. Can offer property (contact underwriter for details). The A rated carriers are Markel, AIG and others. James River Insurance Company An insurer that operates in all states except NH and OH with in-house limits of up to $5 million. Target classes are hotels/motels, resorts, condos, restaurants, bars/taverns, nightclubs, and gentlemen’s clubs. Liquor liability is available in most venues. James River is an A- rated company. Klein Insurance Services, Inc. An MGU that operates in all 50 states. Target class is small to medium-sized full and limited service hotels. Can offer workers comp, auto and umbrella. Westport/Swiss Re is the A+ rated carrier. M.J. Kelly Co., Inc. An MGA/E&S broker that operates in AR, CO, FL, IA, IL, KS, MO, MS, OK, TN and UT with primary limits of $1 million/$2 million up to $5 million and umbrella up to $10 million. Target classes are restaurants, bars, resorts, campgrounds, hotels/motels, canoe rental, and outfitters/guides. Can offer package with liquor. Carriers are Colony (A), Penn-Star (A), Mt. Vernon (A++), Western World (A+), Western Heritage (A+), and Essex (A). McLeckie Insurance Group An MGA/E&S broker that operates in TX only with limits as required. Target classes are hotels and restaurants. Carriers are rated from A- to A+. Midlands Management Corp. An MGA operating in AR, KS, OK and TX with various limits. Target classes are hotels, restaurants and bars. Can offer travel accident. Various carriers are used to place coverage. Motel Insurance Brokers, Inc. An E&S broker that operates in most states with property limits of $25 million and liability limits of $1 million. Target class is hotels/motels. Can offer liquor liability, umbrella, and equipment breakdown. All carriers are A rated. NIF Group, Inc./NIF Pro An MGA/E&S broker that operates countrywide (admitted in eastern United States and CA, OR and WA) with limits of $1 million/$2 million, plus excess and umbrella. Target classes are risks requiring special coverage, new ventures, open 24 months. Can offer liquor liability, special events, assault/battery, property, umbrella, and excess. All carriers are A rated. NorthCoast Excess & Surplus Agency, Inc. An E&S broker that operates in OH only with limits of $2 million/$2 million. Can offer liquor liability. All carriers are A rated. Old Line Insurance An E&S broker that operates in all states with the following limits: guaranteed replacement cost for buildings; actual loss sustained for 12 months for business income; personal contents at your limit—worldwide protection; commercial/personal liability $1 million/$2 million. Target classes are bed and breakfasts, country inns, vacation rentals, spa coverages, restaurants/bars associated with country inns, and residence if separate. Can offer workers comp, excess and/or umbrella. Great Lakes UK and Tudor are rated A+ and Lloyd’s is rated A. Philadelphia Insurance Companies An insurer that operates in all states except LA with GL limits of $1 million/$2 million (optional $1 million/$3 million), property limits of $1 million, liquor liability of $1 million/$1 million, auto of $1 million, and umbrella of $10 million (higher limits optional). Target classes are full service including banquet, meeting, catering, and spa services; condotels; and business class (96% limited service). Will not consider residential hotels, casinos, or frame/joisted masonry construction without an automatic sprinkler system. Philadelphia Insurance is an A+ rated company. Prime Insurance An insurer (Prime)/MGA (IEBS) that operates in all states except AK, CA, CT, NH, NY, RI and TX with all limits. Will consider all classes. Can offer monoline liquor coverage, assault and battery, and after 3 a.m. closing, in the hospitality industry. Prime is a B+ rated company. Roush Insurance Services, Inc. An MGA/E&S broker that operates in IN and OH with property limits up to $15 million and liability limits up to $10 million (higher limits may be available). Will consider all classes in the hospitality industry. Will not write workers comp. Can offer liquor liability, special events, inland marine and equipment breakdown. A- or better carriers are Century Surety, Essex, Evanston, Scottsdale, Atlantic Casualty and Hudson. Russell Bond & Co., Inc. An MGA/E&S broker operating in CT, MA, NJ, NY, PA and VT with GL limits of up to $3 million (plus excess of up to $10 million), and property of all limits. Will consider all risks. Can offer liquor, umbrella, EPL, workers comp, and excess hired and non-owned. All carriers are rated A- or better. S.I.U., LLC An MGA/surplus lines broker/Lloyd’s Correspondent operating in CA only with GL limits of $3 million (excess $5 million). Target classes are hotels/spas, motels, restaurants, and bars. Will not write travel agents who develop or organize their own travel tours. Can offer crime, equipment breakdown, inland marine, assault/battery, liquor, EBL and sign. All carriers are rated A- or better. Southern Hospitality Underwriters, Inc. An MGA that operates nationwide with property limits of $10 million per location and GL limits of $1 per occurrence. Target market is hotels— limited service and full service. Specialty Insurance An MGA that operates in CA, CT, DE, FL, GA, IL, MA, MD, MI, MO, NJ, NY, PA, RI and TN. Target classes are restaurants, bars, taverns, caterers and delis. Will not consider nightclubs, college bars or bouncers. Can offer GL, property, liquor legal, and umbrellas. QBE is the admitted A rated carrier. U.S. Risk Insurance Group, Inc. An MGA/E&S broker that operates in all 50 states with limits of up to $5 million. Target classes are restaurants, nightclubs and bars. All carriers are A rated. Unifax Insurance Systems, Inc. An MGA that operates in CA only with limits of $2 million-plus; property considered; liability of $1 million/$2 million. Target classes are bars/nightclubs, restaurants, microbreweries, and hotels/motels. Will not consider loss of income from food-borne illness; Mexico coverage; timeshare/interval ownership ops, vacation insurance (weather); or travel trailer rentals. Can offer liquor legal liability. Crusader is the B+ carrier. USG Insurance Services, Inc. An MGA/E&S broker/wholesaler/Lloyd’s syndicate that operates in all states except AK and HI with virtually unlimited excess capacity. Target classes are hotels/motels (exclusive program), restaurants, bars, taverns, nightclubs, gentlemen’s clubs, bed and breakfasts, and vacation insurance. Will not write timeshare or interval ownership. Can offer monoline liquor liability, valet, hired and non-owned, kidnap/ransom, international exposures and loss of income from food-borne illness. All admitted and nonadmitted carriers are A rated. Western World Insurance Co. An insurer that operates in all states with GL limits of $1 million/$2 million and property limits of $500,000. Target class is hotels and restaurants with less than 40% liquor sales. Will not write bars, taverns or restaurants exceeding 40% liquor sales. Western World is an A+ rated carrier, as is Tudor. Yates & Associates Insurance Services, Inc. An MGA that operates in CA only with limits of $1 million/$2 million/$1 million plus excess and umbrella. Will consider all classes. Can offer liquor liability, assault/battery, and E&O. All admitted and nonadmitted carriers are A rated. * |
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