Property and Casualty

Hospitality and Gaming Insurance: Strategies to Get Beyond COVID

December 14, 2023

Receptionist talking to clients

As spring break 2021 approached, a COVID-19-driven controversy ensnared Miami Beach and Las Vegas, with local officials sending conflicting messages to college students and other prospective guests.

“If you want to party without restriction, then go somewhere else. Go to Vegas,” said Miami Beach’s city manager.

If the Miami Beach city manager wants to send people to Las Vegas, keep sending them, retorted the manager owner of one of Vegas’ newest resorts.

Hold on a minute, chimed in the commissioner of Clark County, NV, which includes Las Vegas. “Come to Las Vegas, but truthfully there’s no place that’s following restrictions more than we are.”

Meanwhile, colleges around the U.S. had limited spring break to a few days — or canceled it altogether. One university was even paying students to stick around campus, offering $75 grants as incentive to stay within city limits rather than travel. There was also a glimmer of normalcy: Disney World was completely booked from March 13 through March 19, albeit at reduced capacity.

Welcome to the world of hospitality and gaming 2021 — better than 2020, but not as good as we hope it will be in 2022.

The same can be said of the hospitality and gaming industries’ outlook for property and casualty insurance. The P&C market for those in the hospitality and gaming industries is challenging, as difficult as for any other industry — if not more so.

But there are encouraging signs, too. These include:

  • Insurers willing to work with clients to help them survive the hard market and the pandemic;
  • Great strides in COVID-19 vaccination coinciding with better weather and the arrival of spring;
  • An improving economy and federal stimulus that, combined with a widespread urge to travel after a year of lockdowns, should start putting an increasing number of people in hotels and casinos; and
  • Indications that the property and casualty insurance market will soften in 2022 for those in the hospitality and gaming industries who are able to make it to the other side.

The Outlook Entering 2021 

Here’s the outlook on the market for the hospitality and gaming industries as outlined in Alera Group’s Property & Casualty 2021 Market Outlook whitepaper, released in December 2020:

► Rates are rising in most lines of coverages: Hospitality accounts will typically see double-digit increases in Property, General Liability and Umbrella/Excess Liability premiums. Location and loss history will be the major factors influencing pricing. Hospitality accounts with locations in hurricane, earthquake or wildfire areas will experience substantially higher rate hikes.

► Using higher deductibles: In an effort to control insurance costs, clients are opting for higher deductibles and self-insured retentions, and focusing on steps they can take to mitigate risk. Insurers are also raising required deductibles on catastrophe coverage from 2% to 3% to as much as 5% in many geographic areas.

► Insurers are pulling back: Few industries have been hit as hard by COVID-19 as hospitality and gaming. According to the American Hotel & Lodging Association Survey conducted in September 2020, “67% of hotels of U.S. hotel owners report they will only be able to last six more months at current projected revenue and occupancy levels.” This uncertainty, combined with an uptick in catastrophe and liability losses, is leading insurers to reduce their hotel and gaming business. Some are pulling out of the market entirely; others are decreasing the amount of business they write.

► Pay attention to any vacancy exposure: It’s important to be mindful of vacancy provisions in your policy. Most policies include provisions that exclude or limit coverage once a building becomes vacant. Vacancy is typically defined as less than 31% of the total square footage being used to conduct customary operations.

Almost every line of coverage was trending negatively for insurance buyers in the hospitality and gaming industries. Rates and underwriter selectivity were up, availability of coverage and capacity for coverage limits were down.

Cyber Liability appeared to be an exception in maintaining a steady level of availability, but the hospitality and gaming industries’ vulnerability to attacks and breaches was working against it in every other regard. Meanwhile, the market looked to remain unremittingly hard for coverages including Employment Practices Liability, General Liability, Property, and Excess and Umbrella.

While the Workers’ Compensation market was generally stable as we approached 2021, that was subject to change – depending largely on how individual states handled coronavirus-related claims.

To obtain the entire Property & Casualty 2021 Market Outlook whitepaper, including a detailed look at individual lines of coverage for the hospitality and gaming industries, click the link below.


What You Can Do 

Insurers value their clients — especially ones with strong loss histories, sound risk management programs and exemplary payment records — and want them to succeed. You’ll find that most underwriters are willing to be flexible in the renewal process if you follow these guidelines:

  • Have a plan in place for how your business will proceed during the various phases of reopening, and share the plan with your agent or broker for presentation during renewal.
  • Make sure the agent or broker you’re working with has a thorough knowledge not only of your business but of your industry as a whole, along with an understanding of the property and casualty coverages necessary for your protection.
  • Be prepared to discuss tiered rates, based on your business’ capacity over certain periods of time and the associated levels of risk. Fewer guests mean fewer exposures and reduced liability, and that will have an impact on rates.
  • Discuss options for a midterm audit or reduction of minimum earned premium as means to mitigate costs until business is back to normal.
  • To ensure your Workers’ Comp rates are assessed fairly, document how many of your employees are furloughed workers.
  • Start early. You’ll need time to gather the information to share with your agent or broker, who in turn will need time to draft and market a proposal.
  • Keep your eye on the big picture. While reopening your business requires lots of short-term planning, it’s also important to address the longer-term needs of your organization and your employees.
  • To that end, consider attending Alera Group’s March 18 webinar, “How Advanced Strategies Address the Rising Cost of Healthcare.” Healthcare is always a concern, and our Employee Benefits division does a superior job of strategic planning.


About the Author

Robin Rider, CPCU, ARM 
Commercial Account Executive
Kaercher Insurance, an Alera Group Company

A member of Alera Group since 2019, Robin Rider has more than 19 years of agency and carrier experience as an insurance broker, with a specialization in Property Insurance. In addition to gaming and hospitality, she works with industries including real estate, manufacturing, public entities, aviation, retail, technology and telecommunications.

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