Hospitality venues hit by “unsustainable” rise in insurance premiums

Hospitality operators are being hit by “unsustainable” rises in insurance premiums, with some brokers reportedly unwilling to work with late-night venues.

 

Pauline Forster, who has been the landlady of the George Tavern in London’s Shadwell for the past 20 years, has had to pay almost £9,000 for insurance over the past year, which is more than double the rate that she paid in 2020.

 

She told The Caterer: “My premium was just about to run out. There were only two brokers who would take it on, and they were struggling to even find me an insurance company, because hardly any insurance company now wants to take on venues like mine.”

 

The George Tavern dates to the 17th century and regularly hosts music events for up to 150 guests. It was where actress Phoebe Waller-Bridge famously used to perform. Now, it is one of the few remaining pubs in Stepney.

 

Forster approached the Music Venue Trust charity for help when her old insurance broker said it was no longer working with small venues and pubs and was told other businesses were having similar issues.

 

“If I can’t get insurance, I can’t open that door,” she said.

 

Forster said she is already being “hammered on every corner” by rising costs and expects them to rise over the next year. Last week, she had to hire security for the pub six nights a week, which increased wage costs on top of rising salaries. Her energy rate per unit is currently 15p, but this will go up to 51p a unit when her contract finishes at the end of the year.

 

She added: “It’s scary because [the pub] is a listed building. It’s very old, it’s big, it’s draughty, therefore we don’t even have central heating. We’re already paying £900 a month for electricity. I just think the government, if they want and care about these kinds of venues, they’ve got to step in because there’s only so much you can take.”

 

Wider issue

 

The Night Time Industries Association (NTIA) warned some leisure businesses had seen their insurance premiums rise by over 100% and that brokers had struggled to secure coverage for clients in the sector.

 

Simon Mabb, managing director of nightclub insurance specialist NDML, said the late-night sector was “not everyone’s cup of team insurer-wise” and warned operators should be braced for prices to go up when their contracts renewed over the next year.

 

He said: “If you’re buying food ingredients, that’s the here and now. People only renew their insurance on an annual basis. It’s another one of those costs that will just hit people when it comes to renewal.

 

“You’ve got a perfect storm. All sorts of costs going up across all areas of all industries. Insurers are suffering inflationary pressures. Costs are skyrocketing, which is going to get passed onto the claims process.”

 

The NTIA and NDML said insurers have started to “strip back” on Covid or business interruption cover and are lobbying for a government-backed insurance scheme to alleviate the strain on hospitality and leisure businesses.

 

Michael Kill, chief executive officer of the NTIA, said: “We are now facing a cost inflation crisis, from the effects of overseas conflict and domestic policy decisions which have seen insurance costs in some cases double. This is not sustainable; insurance will require creative intervention from the government to grow confidence in the leisure market and reduce premium costs to an affordable level.”

 

Mabb added: “If there is a crisis scheme solution that picks up some of those unknowns that are out there, maybe that would give some of the insurers more confidence and give the venue operators a bit more certainty on what they have got covered.”

 

Earlier this month, the NTIA and Music Venue Trust, along with other leading representatives the hospitality industry, signed an open letter to government asking for urgent action on energy bills and rising costs.

 

The Department for Digital, Culture, Media and Sport has been contacted for comment.

 

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