Page 26 - 2016 State of the Market from AmWINS

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INDUSTRIES
HOSPITALITY
Wide variability in underwriting appetite demands
specialization and market knowledge
In the hospitality insurance sector,
mainstream risks such as restaurants, bars,
and hotels remain extremely competitive,
with rates for casualty coverage continuing
the single-digit decline seen in 2015.
“The ‘white tablecloth’ space is always
soft because of the large number of
programs and MGAs, as well as a strong
appetite from standard market carriers
that package the business. It can be a
cutthroat space to do business in,” says
Brian Davidian, executive vice president
and casualty broker at AmWINS Brokerage
in Los Angeles, California.
A key exception to this competitive
climate is the specialty lines sector of
nightclubs and adult entertainment venues.
“The nightlife space is nearly devoid of
standard market carriers,” Davidian says.
“Additionally, the specialty market for
hospitality has shown some hardening,
with carriers pulling back and some
markets unwilling to look at venues with
significant liquor liability exposure due to
prohibitive dram shop laws.”
Aspen’s withdrawal from specialty
hospitality was considered a loss to
the sector while an overall tightening of
capacity has had an impact on both rates
and terms. “Per-location liquor liability and
reasonable self-insured retention levels are
becoming harder to find,” Davidian says.
Even when coverage can be found, venues
may not be able to afford it. “Hospitality
tends to be a cash-flow business,” Davidian fact employees. Knowing how aggressively
says. “A business owner may want $1
million in coverage for assault and battery is important,” Davidian says.
but cannot or will not accept the premium.”
However, some operations may be forced
to accept higher rates to comply with
local or state regulations or contractual
demands from property owners.
Typical of the specialty space, there
is a wide range of appetites across
underwriters, even among those who work
for the same carrier. Knowing the market
is essential to acquiring and retaining
accounts.
“Every deal is different,” Davidian says.
“Success depends on going to the
right underwriters, bringing in the right
resources, and having established
relationships in the space in order to get
a quote or even to turn a declination into
a consideration. Brokers who don’t know
the space will lose out because they can’t
offer the coverage needed at an affordable
price.”
Claims expertise is also increasingly
important in a sector plagued by employee
vs. independent contractor claims. “It’s
very common in the adult hospitality class
for people to sign on as independent
contractors in order to make more
money, but then later sue the business for
employment benefits, claiming they were in
an insurer will defend against those claims
“We’re able to leverage both our dedicated
claims group and an outside expert for
large or difficult claims like those, which
is important because those claims can
be complex and emotionally charged,”
Davidian says. “Combined with our
market knowledge, the ability to effectively
represent an insured in a claims situation
creates an advantage for retail agents and
brokers who target hospitality accounts.”
• Single-digit pricing decreases
can be achieved by most
businesses in the sector.
• Some hardening is being seen
in nightclubs, adult venues, and
locations with significant liquor
liability exposure.
• Established relationships with
hospitality underwriters are
essential to navigate a complex
environment.