5 ways to help hoteliers navigate the insurance marketplace
By Elaine Simon
While insurance isn’t a career that most people grow up dreaming about going into, it is undoubtedly a profession that is of the utmost importance to hotel owners and operators.
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Christine Taylor, claims consultant and strategic insurance partner with Lockton Companies, has been in the insurance business for more than 20 years, and many of those years have been spent insuring Red Roof properties. It’s currently the hardest insurance market in 40 years, she said, due to a number of factors, including 2022’s Hurricane Ian, which is considered the third costliest hurricane on record; the aftermath of COVID 19; and carriers’ shrinking capacity. In addition, inflation and increases in construction costs are not helping the issue.
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“Property insurance is the line of coverage that is causing the most trouble for hoteliers,” Taylor said. “It is because of increased—we call them CAT losses, which are catastrophes—increased hurricanes, wildfires. Those kinds of things have really [spurred] the property insurance market just into a frenzy. And that's what we're in right now. Other coverages are just as important if you have a loss but as far as pricing and getting insurance companies to actually want to write you [coverage], that's where the pain point is.”
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Taylor is bringing her insurance expertise to Red Roof’s SHE Leads Forum on Sept. 28-29 in Dallas, where she will be participating in a Q&A session that will cover the state of the insurance industry and how hoteliers can get the best coverage for their properties.
INSURANCE BASICS
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Two of the main considerations are type of property and location, according to Taylor.
“It depends on your type of property and where you're located,” she said. “So if you're in Nebraska, you're good because you're not near any of the bad stuff that is happening. The winds, the wildfires, rain. But people are still going to do business in Florida. It's a great place to do business, so we have to be able to help them regardless, even though it's a bad place to buy insurance.”
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Taylor did offer hope, though, that the insurance market can moderate.
“If we can have a couple of quiet years, mainly in terms of storms, the insurance companies will correct themselves and they will begin to make money again and the rates should start to come down. Insurance companies go through hard and soft markets. Everyone believes we'll get out of this cycle but we have to have a few years without some major, major hurricanes.”
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Of course, when Taylor says rates will come down, what she’s referring to are the yearly premium increases.
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“If you're paying $200,000, it's not like you're going to get back to $100,000 ever,” she said. “But this year your increase is 50 percent, which is horrendous. Once we get in a soft market, maybe the increases are 5 percent or negative 2 percent. Maybe there is a small decrease, but a decrease from where you're at. What's going to slow down is the increases.”
BEING PROACTIVE
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In the meantime, there are a number of steps hoteliers can take to get the best insurance deal possible while they wait for the market to moderate. Here are five that Taylor recommends as some of the best for hoteliers to be on top of:
Start early: “In a typical market, we work 90 days in advance but because we're in such a hard market, we advise 120 days prior to your renewal date that you start gathering information, getting your insurance broker what they need, so that they can present your best foot forward.”
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Get your paperwork in order: “Know what your losses are. Get the information back to your brokers, who are probably going to have an application or some updated questions that they need you to answer. Get those back as quickly as possible so that they can access as many markets with enough time.”
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Have your safety plans in place: “They’re going to ask if you have an evacuation plan. Do you have life safety? Do you have eyewash stations? Are your bottles labeled? Is all of that safety stuff documented? Rather than saying, ‘Well, I think we get our fire extinguishers checked,’ you need to have an actual written plan. Being able to speak to how you protect your employees and your guests and understand what can cause guest and or employee injuries is important.”
Have good maintenance records: “If it's not written down, it didn't happen. We can say that we salted all we want but if we don't have it documented, we didn't salt. We have to have good maintenance records that we can provide.”
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Be knowledgeable: Understand what is covered and what is not covered in your policy.
These tips hold true for the most part even for new builds and for owners that are in the process of buying a new hotel, according to Taylor. While they might not always have 120 days to get everything in order, they typically have at least 60 to 90, she said, and they can be working on the other steps in that time frame.
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SHE LEADS FORUM
Taylor said she is looking forward to participating in the SHE Leads Forum for a number of reasons.
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“Even if I don't write a franchisees’ insurance, I care that they have it and I care that they have the coverage they need when an ‘oops’ happens, when something goes wrong,” she said. “So anytime we can get in front of people and offer them advice and assistance, we jump at the chance to do that. Also, as a woman I'm very pro girl power and so that makes me want to do it even more.”
Taylor’s session will cover the state of the insurance industry, franchisees’ biggest pain points, how franchisees can mitigate insurance increases and whether there is any relief in sight, along with some questions from the audience.
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“It will be a lot of information in a quick amount of time, but I hope that everybody leaves with at least one piece of information, which is they can call me,” she said. “They can email me, they can ask us, even if we don't write their insurance. We're happy to help. We’re all part of the same Red Roof family and that's what we're here for.”
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Visit www.she-leads.com for more information about Red Roof’s SHE Leads Forum and for tools to help you manage your business, rise in the ranks and find the confidence to become a successful business leader.