Pricing “through the roof” – hospitality insurance woes
Pricing “through the roof” – hospitality insurance woes | Insurance Business Australia
Hospitality
Pricing “through the roof” – hospitality insurance woes
“Alcohol and dancing is a bad mix”
Hospitality
By
Daniel Wood
The hospitality space is facing acute insurance pressures, says Peter Mckenzie (pictured above), SLE Worldwide Australia’s general manager.
“Any business involving live venues that have dance floors and music, like nightclubs – they’re under a lot of stress at the moment from the industry,” said Sydney-based Mckenzie.
One of the underlying causes, he suggested, is alcohol consumption combined with a physical activity.
A risky combination: Alcohol and dancing
“Unfortunately, alcohol and dancing is a bad mix in Australia, causing such things as assault and battery and slip-and-falls,” he said. “Pricing in this sector has gone through the roof with very limited insurance markets to source terms.”
SLE Worldwide is one of the largest providers of insurance to the entertainment industry in Australia – an important segment of the hospitality sector.
The insurance affordability and availability issues are impacting a range of businesses in the hospitality space, he said, including nightclubs, music venues, clubs and RSLs.
Mckenzie said the coverage pressures have built up over the last 12 months and continue to intensify.
“We are a market in this space but we’re very selective and our pricings are firm and fast, and a lot of the time clients don’t appreciate what we’re offering,” he said. “But as I’ve said to brokers, at least we’re putting an option up for a client to review, whereas most insurers will just straight out decline.”
Focus of insurance pressure: Ticketed events
Mckenzie said that ticketed events, like live bands playing at music venues, are facing the worst insurance pressures.
“We’re talking here more about ticketed events or where you’re paying an admission fee to come into a venue,” he said.
In contrast, outdoor events, like music festivals, are not facing the same costs or availability issues.
“There’s a differentiator with those venues compared to big festivals because what many big festivals do, and this is part of the risk management, they’ll outsource their security and they’ll also outsource the bar, so the service of alcohol is done by third parties,” he said.
Bluesfest took place during the Easter long weekend for the first time in two years.
“For me, insuring something like an outdoor festival involves reviewing the event layout, its risk management protocols, traffic management plans and camping procedures to name a few,” Mckenzie said.
Apart from outsourcing their security and alcohol service, he said layout is key for outdoor festivals. This includes making sure there are sufficiently spaced barrier systems for staging and that the electrics and everything set up around that is done safely.
RSLs and Leagues Clubs
Indoor hospitality venues with live music and alcohol face different risk management challenges.
“Hospitality venues are for the purpose of people coming in to have a meal or drink and kicking up their heels,” Mckenzie said.
The many hundreds of clubs run by the Returned and Services League of Australia (RSL Australia) are part of this industry but their insurance challenges are different to straight music venues.
“They’re [the RSLs] a subsection [of the hospitality space],” said Mckenzie. “RSLs and licensed clubs are different, again because more often you’re dealing with an older demographic so you then get the general trip and slip issues with the elderly and claims in that regard.”
RSLs are just one type of licensed club. Others include local bowling clubs and Leagues Clubs.
“A licensed club can go from the local bowling club up to say, the Canterbury Leagues Club, which is like a casino because it’s got multiple restaurants, bars and also does functions,” he said.
Mckenzie said hospitality venues like Leagues Clubs can have risk management needs and costs that go up “another five levels from an insurance perspective.”
What coverage does a hospitality business need?
Typically, the range of insurances hospitality businesses require can include coverages for: public liability, property damage, contingency insurance (for event cancellations), business Interruption Insurance, workers compensation, management liability and legal expenses, product liability Insurance (for food and beverages), machinery breakdown (for fridges or generators); and cyber.
Are you a broker working in the hospitality space? Please tell us your insurance challenges below
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