Risks that can be Insured in the Hospitality Industry

Harpreet Singh, Head - General Insurance, Sridhar Insurance Brokers (SIB) India New Delhi based Sridhar Insurance Brokers helps clients across industries understand the best suited investment plans for their enterprise and mitigate the maximum risk involved for a strategic growth.

Hospitality Industry is one of such industries which are booming at this point of time. The reason behind this is with the changes in lifestyle of people around the world, this industry is playing a huge role. As the industry is in a good position in recent past, there are a number of risks which are faced by these industries quite frequently. However, these risks can be well covered with the help of an insurance covering the same. There are a number of insurances available in the market which can be opted while covering any of such threats. Here we will discuss about some of the most common threats which are often faced by a business based in hospitality management. These threats will be covered with the help of any good hospitality insurance.

What are the risks that are covered under insurance for the hospitality industry?
The below are some of the most common yet dangerous threats which are faced by any hospitality industry quite frequently.

• Cyber Security: In this world of technology, internet plays a great role in any industry. With all the positive effects of internet, there are a few things which can cost this type of industries their fortune. In a word, there are a number of threats which can come across when it comes to Information technology. Thus, cyber security is one of the biggest threats which can be covered with the help of insurance. Talking about threats of Information Technology, the most common one is the data theft. In hotels and guest houses, there are a number of guests who come and go. The specific hotel records all the personal details of each and every client of them. Say, there comes a breach in the cyber security and all the data are taken or being deleted. In this very case, the first thing which the hospital should do is; inform their clients about the incontinence caused. Then, all legal formalities and lawsuit will come. The whole process takes a lot of time and at the same time, a lot of funds. These losses can be well covered with the help of Insurance.

• Guest threats: It is true those guests are main source of income for any hospitality management industry. Be it a hotel or a restaurant, with your guests you are
nothing. However, these guests can turn into your one of the biggest threats. For an instance, few years back there was a case where a chain of hotels was sued with around 6 million dollars. The reason behind this was in a hotel of this very chain, 6 guests died due to bacteria which were alleged to found in the water they served. However, that same water does not affected any of the other clients and when the case was filed, the hotel was found guilty and sued with the said amount. Nevertheless, the full amount was covered by an insurance firm they were tied with. Thus, guests are one big threat and should be covered with good hospitality insurance.

As the industry is in a good position in recent past, there are a number of risks which are faced by these industries quite frequently. However, these risks can be well covered with the help of an insurance covering the same

• Staff Threats: Just like the guests, staffs are also a part of some critical threats when it comes to a hospitality industry. In a group of hotels or restaurants, there are staffs working together and it is not possible to keep an eye for each one of them. Starting from stolen assets to creating issues, staffs can be a real threat. Moreover, with booming economy in this industry the competition level is continuously increasing among the hoteliers. Thus, their staffs often become a threat. In a word, staffs are being manipulated to work for other hotels or restaurant. With great demand, one has to some great amenities to retain a staff for your restaurant or hotel. Thus, all the expenses which are incurred can be well covered with any hospitality management insurance.

• Brand Name: This is one of the main threats for a well established brand in this industry. The reason behind this is once you gain a brand value for your business it becomes very difficult to retain the same. Thus, in such a case, insurance can come handy with the legal issues and its expenses.

• Assets and Liabilities: Apart from all the above threats, assets and liabilities should also be safe guarded while dealing in this industry. The main reason behind this is these chains of businesses deals with very costly assets. Some of these assets may be damaged due to some uncertain activities like Terrorism, Asset Breakdown, Thefts and burglary and many more uncertain things like these. Just like your assets, your liabilities should also be covered. Some of the main liabilities which should are generally covered by an Insurance are Employee compensation,third party liability and liabilities in regards to officers and Directors.

• Financials: As this industry deals with heavy financials including cash, insurance covering these is always a great idea. Some of the financials which are covered by insurance may include increased production cost, Loss in business or profit minimisation.

• Employees: Similar to staffs and guests, employees are also someone who can be a threat for your business is not properly insured. Cost incurred for their Health, accidents, fidelities including gratuities and all can be covered a proper hospitality management insurance.

What is the percentage of the hospitality industry that opts for insurance?
This is a pretty common question which is quite frequently asked by the hoteliers. While reverting the answer, one thing can be said is everyone should opt for a Insurance when it comes to hospitality management. With some great assets to safeguard, it is always recommend going for a great one. Statistically, 100 percent of all big chains in this industry is more or less covered by insurance. However, there are few small businesses who might be thinking of getting one. It can be well concluded that Hospitality Management is a big industry which is still growing in a regular basis. Getting an insurance to safeguard some loss is what every businessman in this industry should look for.