Hotel is refused insurance rebate despite closure
Anger as hotels which were closed for the majority of last year are unable to get rebates on the premiums paid up front
A CLONAKILTY hotel manager believes insurance companies are ‘almost operating a cartel’ when it comes to insuring the leisure industry.
David Henry, general manager of the Clonakilty Park Hotel, said he has had no option but to renew his cover with his existing insurer.
He says there appears to be no competition in the market when his current insurers were the only ones he could even get a quote from.
‘It’s a take-it-or-leave-it policy, so we can’t look to others because insurance companies won’t take on any new business. It’s especially the case in the leisure industry, because they don’t see it as an attractive prospect,’ said Mr Henry.
The hotel manager added that this isn’t something new, but it has become very frustrating in recent years.
‘We have to go through a broker to get insurance for a complex of this size, as the insurance companies won’t deal with you directly,’ said David.
‘It’s the only gig in town and from what I can see, the underwriters and insurance companies can cherry-pick what they are going to indemnify in Ireland.’
David said it’s a similar situation facing other hotels and he knows of two to three brokers who cannot get quotes from any other insurance company, apart from their client’s current insurer.
‘There’s no competition in the market whatsoever. To add insult to injury, it’s a minimum premium.
If you insure your business for €3.5m, for example, and if you over-insure your business, you won’t get any rebate. But if my sales exceed €3.5m, they will come back to me looking for an increase in my premium.’
Annette O’Donovan, general manager of the Westlodge Hotel in Bantry, agrees that it has become a far more restricted market in recent years.
‘I haven’t gone shopping yet for this year as ours isn’t out until the end of July, but we still had a choice last year. But if you have additional claims, then you have no choice but to stay where you are – there would be no point shopping around,’ said Ms O’Donovan.
‘From a cost point of view, the cost of insurance has become ridiculous in the last three to four years. The level of “claim culture” has also gotten worse, rather than better.’
Meanwhile, David Henry said the Clonakilty-based hotel’s sales have decreased by almost 50% on the previous year, and the business has been closed for eight months out of the last 12 due to Covid. Yet he still cannot get any rebate.
‘To make matters worse, they have said their costs have increased so they have increased the premium on last year, even with our reduced sales. They also want a minimum premium for the property,’ he explained.
‘They don’t want to know about anything, even about the reduction in claims that the government is planning to introduce.
‘The excess for claims for insurance can be anything from €5,000 to €10,000 and if a guest makes a claim, I could be liable for the first €10,000 on top of my premium.’
‘I’d nearly say that there is almost a cartel operating, because it seems no one is taking on any new business. So you’re stuck with the same insurance company, and they can basically charge what they want.’
David said the hotel has had to pay a full premium for April, May and June, even if the business is closed.
It has paid in excess of €149,000 in the last two years for insurance, with no claims. It has also had ‘business interruption’ included in the policy, but yet the insurers won’t entertain the impact that the pandemic has had on the business.
‘We have had no choice but to take out a loan and pay it back in instalments over the next 12 months, because we can’t operate without insurance,’ he said.
‘I’ve had no claims for the past two years and only had a few in the previous years, which were settled.
‘I should be thankful in one way,’ he continued, ‘that I have insurance.
‘But my issue is that they are looking for minimum spend, they have increased my insurance policy, and they’re not giving me any rebate.’
David has discussed the situation with several TDs and the Irish Hotels Federation. He says insurance companies are holding the industry to ransom, with no repercussions.