2022 outlook for insurance rates, claims for hotels and resorts.

Although commercial property rates saw double-digit increases this past year, moderation of rate growth is on the horizon in 2022 for hotels, resorts and companies that manage these businesses, according to John Welty, president of Suitelife Underwriting Managers.

“This year, we predict that good property accounts may see rate increases of 5%-10%, with general liability rate increases of 7.5%-10%”. “On the other hand, a less attractive account could see rates increase anywhere from 10%-30%.”

Less attractive accounts might include hotels located in a catastrophic loss area, those with increased exposure to wildfire risk, flooding, hurricanes and businesses with complex loss histories, Welty explains.

“Just like we are seeing rate increases slow for good accounts, rates are also predicted to soften in the second half of 2022,” he continued. “At the same time, more carriers are introducing reinsurance on their policies in 2022, particularly property policies. This will lead to potential rates increasing once again.”

What are some of the factors influencing that?

Weather plays a large role in the property market. Weather-related losses in 2021 were more costly than in 2019. But we are also seeing losses outside weather-prone areas. These losses come as the result of a variety of challenges such as nationwide material shortages and labor shortages. The labor and building issues, coupled with inflation are raising insurance-to-value concerns.

What are some of the unique risks facing hotels today?

While risks for the hospitality industry remain largely unchanged — with slips, trips and falls and weather-related incidents taking the lead — an increase of new technology and the use of it presents additional risks. With services such as online booking, contactless receptionists and remote concierges increasing in popularity, risk exposure increases for hotel operations.

How can insurers help these businesses mitigate these risks?

It is the responsibility of the insurer, partnered with the agent or broker, to guide businesses in mitigating risks. Often carriers don’t get involved until after claims have occurred or if a hotel proactively reaches out and asks for help. A broker, however, should be regularly discussing risk assessments and offering mitigation measures, as well as suggesting training, and confirming that coverage is in place.

While it is incumbent on the hotel to ask for help as they know their business best, at Suitelife we provide a resource page, access to our risk managers as resources and consistent communications to help mitigate risks. We provide a pre-loss, during and post-loss checklist, an executive report on trends and challenges on a quarterly basis and weekly email and social media communications to brokers on how they can help hoteliers.

With so much turnover in the hospitality industry during the past two years, what should hoteliers make sure to instill in new hires about potential risks and worker safety?

Employees are the hoteliers’ most important asset. Training frequently and often is the key to operating safely and reducing over risk exposure, particularly in times of high employee turnover. Some hotels are still seeing turnover rates as high as 50%. As a result, many employees are performing different and new jobs.

With proper, consistent training in place employees can better understand what to expect and how to handle incidents. In addition to training, it is important to have reminders and communications around such training and procedures in place. A daily checklist of expected duties posted in the right place can go a long way toward mitigating risk.

At the end of the day, hoteliers are focused on consistently providing and improving upon a superior guest experience. Training and vigilance around simple but critical tasks, such as cleaning and maintenance can go a long way toward keeping guests happy and providing a good experience.

Taken From: https://www.propertycasualty360.com/2022/02/04/2022-outlook-for-insurance-rates-claims for-hotels/?kw=2022%20outlook%20for%20insurance%20rates%2C%20claims%20for%20hotels&utm_campaign=ne wsroomupdate&utm_content=20220204&utm_medium=enl&utm_source=email&utm_term=pc360

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Commercial P&C Insurance

Commercial Office Space Set for a Strong Comeback

The sustained increase in demand for office space across the nation since late 2022 suggests that the market has moved past its lowest point, according to insights from the real estate technology platform, VTS. Demand for office space began to rise in late 2022 and continued into early 2023. Since then, the office market has experienced a period of stability and growth, supported by favorable economic factors, indicating a market rebound. This conclusion is drawn from the VTS Office Demand Index (VODI), which tracks unique new tenant tour requests for office properties in key U.S. markets. The VODI serves as an early indicator of future office leasing activity. According to the index, demand for office space has grown consistently over the past 12 months, closing the second quarter with a 17% year-over-year increase and a 34% rise from the VODI’s lowest point in December 2022. A significant shift in office-based employment patterns further supports the belief that demand for office space has stabilized. After reaching its peak in August 2022, office-based employment declined by 3.9% in early 2024. However, this trend has since stabilized, and employment growth has remained steady. Additionally, a recent decrease in work-from-home rates has fueled the renewed demand for office space. “They say you can only recognize a market bottom after it has passed, and the office space market is no exception. Following what we now see as the bottom, the national demand has gradually increased, though it remains susceptible to economic challenges,” said Nick Romito, CEO of VTS. “However, the growth observed in VODI over the past 18 months, coupled with positive trends in the office-using workforce, suggests that the market has reset, and the worst is behind us.” It’s important to note that this national trend does not impact all local markets equally. Cities like Los Angeles and New York City have seen healthy growth in office space demand, while markets such as San Francisco and Washington, D.C., have experienced prolonged stagnation. In Los Angeles, office space demand surged in the second quarter, briefly surpassing pre-COVID levels, driven by an increase in the average size of office spaces sought by tenants. New York City followed a similar overall pattern, though with some softness in the second quarter. Conversely, San Francisco’s demand for office space remains unpredictable, largely due to its tech-focused workforce, which continues to favor remote work more than other industries. “Markets heavily dependent on the tech sector, like San Francisco and Seattle, are on a markedly different post-COVID recovery path compared to more diversified markets like Los Angeles and New York City. It may take some time before we see office demand in San Francisco and Seattle return to pre-COVID levels,” added Ryan Masiello, Chief Strategy Officer at VTS.

Cyber Liability

Global IT Outage Puts Business Interruption Insurance in the Spotlight

In July, a global IT outage had a significant impact on business interruption insurance policies, overshadowing the effects on cyber insurance coverages. “This incident wasn’t a result of a malicious attack, which is why typical cyber insurance policies may not have been activated,” explained Peter McMurtrie, a partner in West Monroe’s insurance sector, in an interview with PropertyCasualty360.com. “Where coverage was applicable, factors like deductible amounts, waiting periods, and coverage limits played a critical role in determining the extent of exposure,” McMurtrie noted. “Standard policies for small businesses were less likely to offer coverage, while more complex policies for mid-sized companies and Fortune 500 corporations may have included broader triggers for non-malicious outages caused by third-party software issues.” The outage was triggered by a software update on July 19, 2024, by cybersecurity firm CrowdStrike, which affected organizations worldwide using Microsoft Windows. This interruption had far-reaching consequences, including disrupting hospital systems, media outlets, financial institutions, delaying thousands of flights, and halting daily business operations. McMurtrie emphasized that while the initial impact of the outage was similar for both large and small businesses, the ability to recover operations and whether insurance covered the loss of business income varied. “Larger companies are more likely to have advanced disaster recovery plans that ensure service redundancy following unexpected outages,” he added. “Their insurance programs also tend to cover a wider range of incidents.” According to Microsoft, the CrowdStrike update error affected over 8.5 million Windows devices globally. The incident highlighted the interconnected nature of our global ecosystem, including cloud providers, software platforms, security services, and their clients. “It’s a stark reminder of the importance of prioritizing safe deployment and disaster recovery across the tech industry,” the company said in a blog post. McMurtrie pointed out that the outage’s widespread impact was largely due to its effect on organizations that are critical to societal infrastructure—sectors like agriculture, airlines, banking, energy, government, healthcare, manufacturing, and retail. “Insurance companies base their risk appetite on their ability to understand and price risks appropriately. This becomes increasingly challenging with emerging threats,” he said. “However, I anticipate that insurers will respond by clarifying policy language, refining risk selection criteria, and possibly developing new products specifically designed for this evolving exposure.”

2022 outlook for insurance rates, claims for hotels and resorts.