Divergence in Hospitality Insurance: Property vs. Casualty

The hospitality insurance market is experiencing a pronounced divergence between property and casualty lines, as noted by Dana Fansler, Assistant Vice President and Program Manager at Amwins Program Underwriters.

The property insurance segment is showing signs of softening, with increased capacity driving competitive pricing and enhanced terms, especially for well-performing hotel accounts. Conversely, the casualty segment faces persistent challenges due to escalating litigation and substantial legal verdicts that negatively impact carrier profitability. Fansler highlighted in the Insurance Journal the shift in focus from premium volumes to detailed coverage scrutiny among insurers.

Property Insurance: A Competitive Landscape

The latest report from Amwins, "State of the Market: A Focus on Hospitality," points to increased global and domestic capacity. Coupled with a calm 2025 storm season, this has led to reduced premiums and broader terms for property insurance in favorable regions. Hotels in these areas may enjoy premium reductions between 15% and 25%, alongside higher coverage limits. The renewed interest from carriers in previously avoided classes has spurred competition in property insurance, following a stint of harsh market conditions.

Casualty Lines: Challenges Persist

On the casualty front, the market depicts inconsistent premium trends. While general and liquor liability rates have softened for certain restaurant and bar risks, these improvements often come with stricter coverage conditions. Coverage design is crucial in determining underwriting outcomes, where similar premiums could reflect vastly different coverage structures. Issues such as slip-and-fall claims remain substantial liability concerns, frequently resulting in hefty settlements.

Casualty Coverage Elements:

• Slip-and-fall claims often result in six to seven-figure settlements.
• Exposure to assault, abuse, and human trafficking requires robust scrutiny.
• Liquor liability remains a high concern for both hotels and restaurants.

Emerging Underwriting Concerns

The evolving focus on human trafficking and abuse exposures has prompted insurers to adopt more nuanced approaches. There is a trend toward imposing sub-limits and exclusions, with some defenses becoming cost-inclusive. The heightened legal and public awareness surrounding human trafficking is a critical area necessitating refined coverage options.

Fansler advises hotel operators to prioritize comprehensive training and security measures to mitigate potential risks. It is crucial for industry professionals to understand their policy coverages to safeguard against significant exposure gaps. Additionally, businesses involved in THC beverage service contend with a complex and varied regulatory landscape that could introduce further liability challenges.

Strategic Insurance Submissions

Insurance professionals should emphasize transparency and detail when submitting hospitality risks. Fansler suggests avoiding limited information submissions. Instead, comprehensive documentation, including loss histories and detailed safety protocols, can significantly influence underwriting decisions. Engaging with carriers well ahead of renewal deadlines can facilitate thorough negotiations, ensuring both adequate coverage and strategic cost management.