Stephen McCord
Executive Vice President, Business Insurance, Real Estate & Hospitality
In recent years, the insurance landscape for hotel owners, managers, and developers has undergone a significant transformation. This shift presents the industry with unprecedented risks and exposures.
The current state of the market is a result of various factors, including changes in legislation and the resulting actions from insurance carriers. Hotel clients now face more challenges and uncertainties, necessitating comprehensive risk management solutions.
While marketplace conditions for hotels may not seem ideal, challenges often unfold into opportunities. Threats to the hotel industry allow for new ways to increase resiliency so you and your organization can thrive no matter the conditions.
Let’s examine two key risks that could significantly impact the hospitality industry and how we can help address them.
Changing statute of limitations
As with many industries, changing regulations can be disruptive if not prepared. Staying ahead of hotel regulations and laws is a crucial component of hotel risk management.
One key development that has profoundly impacted the hotel industry is the changing statute of limitations related to the Child Victims Act and the Adult Survivors Act. Many states have revised or eliminated these limitations, allowing victims of abuse to file claims against hotels for incidents that occurred in the past. This has led to a surge in claims and legal actions against hotels, exposing them to significant financial and reputational risks. This includes claims related to child abuse, sexual assault, and human trafficking.
As a result, hotel clients must have robust insurance coverage to protect against these claims and mitigate the financial and reputational damage they can cause. Beyond insurance, hotels also need to have effective risk management guidelines, tools, and resources in place to make any possible future claims scenarios easier to navigate.
Navigating hotel regulations and laws can sometimes be a challenging task, but this is a particular area where having a knowledgeable partner can make all the difference.
Insurance carrier actions
As mentioned, many insurance carriers have responded to the changing landscape by exiting the hotel liability space, reducing their capacity, or imposing limitations on coverage. This has left hotel owners and operators with limited options for obtaining comprehensive insurance coverage that adequately addresses their unique risks. The reduction in available coverage and capacity has created limited markets, which has driven up insurance costs for hotel clients, making it more challenging to secure suitable coverage.
