Insurance hike puts livelihoods at risk

INSURANCE for hotels and guesthouses has increased by an average of 351% since 2000, forcing some owners to risk their entire livelihoods by operating without insurance, the Irish Hotels Federation revealed yesterday.

The Irish Hotels Federation (IHF) will this week tell the Joint Oireachtas Committee on Enterprise and Small Business that a recent survey of over 900 hotels and guesthouses reveals the average insurance premium in the sector rose a massive 351% between 2000 and 2003.

IHF president Jim Murphy said it is unacceptable that no action has occurred to improve the situation. Insurance is the biggest single overhead cost item for hotels and guesthouses.

Mr Murphy said some hotels were carrying the first €100,000 of a claim while others had no insurance.

“I have to advice against not having insurance as one genuine serious claim could wipe a business out,” he cautioned.

Mr Murphy said the sector is attempting to be competitive but explained it is a low margin business and sensitive to price increases.

“Given that insurance, local authority rates, the tax regime and staff costs have all seen major increases in the last number of years these are seriously eroding and in many cases putting hotel and guesthouse businesses into serious loss-making situations,” Mr Murphy stated.

The IHF president said the massive hikes in insurance turned many hotels with less than 50 bedrooms into loss making situations resulting in some selling up and a small number taking a gamble of not having insurance.

“Insurance companies should no longer able to settle claims without prior discussions with the insured party. Claims should not be admissible unless the person in charge of premises is informed of the incident at the time of an accident.

It is not acceptable that the first notice is a letter from a solicitor, in many cases, months and even years

afterwards.

Businesses must be afforded the basic right of being able to effectively investigate incidents and appraise the extent of the injuries and determine where the injuries were incurred,” he said.

Mr Murphy said the IHF strongly believes a criminal charge of insurance fraud should also be introduced and resources for its enforcement be made available.

“This would reduce the number of spurious claims,” he predicted.

Mr Murphy concluded by stating there was no transparency in how insurance premiums are calculated, with seemingly no correlation between premiums and a properties claim history.

“We have examples of our members who experienced 75% increases in insurance premiums with no claims being made in recent years.

“We believe that the insurance industry should be open and transparent about how it calculates the increases and work in better partnership with its clients to ensure an equitable and fair fee is charged for cover,” he complained.