After several years of falling prices are hotel insurance premiums set to rise?
Author: Isla Campbell
Category: Finance
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Although the hotel and hospitality industry has been through hard times lately, it's hasn't been all bad news for those in the business as insurance average premiums have fallen by almost a third over recent years, providing much needed relief from rising costs elsewhere. Unfortunately, that trend is not expected to continue.
In mid-2004 the average annual premium for hotels was £3,826 per premises, but by mid-2007 that figure had fallen to £2,594; a drop of just over 32% in only two years.
Similarly, insurance premiums for restaurants have been falling steadily since July 2003 when they stood at an average £1,622 per premises. Midway through 2007 the figure stood at £1,106 representing a three-year drop of almost 32% in premium costs.
Conversely, pub insurance premium costs rose between July 2003 and July 2005 by approximately 17% before dramatically falling back over the next two years. At their peak in July 2005 the average annual premium was £1,785, before dropping £500 in only one year and recording a smaller fall of £142 between 2006 and 2007, representing a 36% decrease over the total two year period.
The drop in average hotel insurance premiums has been particularly favourable in real terms, helping owners allay some of their rapidly rising costs in other areas. But the good days may be over as many insurance industry experts are predicting a turnaround. With it comes a rise in premiums over the next year, as harsher global financial conditions begin to bite, adding insurance premiums to the list of ever-rising items.
To ensure that they get the best deal in the coming year, hoteliers are advised to shop around. Due to the nature of the business, hotel insurance falls into a number of categories. For most hoteliers, such as private operators who own only one hotel, standard off-the-shelf policies from one of the UK's major insurers will usually do the job, whereas other private owners may need cover for several hotels. In addition, commercial operators also need cover for chains of hotels and those complex and often bespoke policies are usually arranged with the help of a broker.
Such cover is usually bespoke to the insured and calculated risk management forms the basis of most of the policies that are eventually taken out in that way.
As well as multiple locations some hotels may require specialist insurance arrangements due to various property features such as listed building status, or remote or coastal location. Other factors such as types of facilities, including swimming pools, conference centres, golf courses or extensive parkland will also impact on the type of insurance options available to the hotelier.
In the short term insurance premiums may well start rising, but the canny hotelier will shop around to make sure they get the best deal possible for their premises.
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Keywords: hotel insurance, specialist insurance arrangements, insurance premiums, hotel insurance premiums
View Count: 71
Date Submitted: 5/28/2008
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