The industry landscape in 2021 is finding more pubs around the country dealing with ballooning insurance premiums, or worse, as insurers take a hard line on old venues.
Post-COVID finds some pubs facing price hikes of more than 100 per cent, as the risk appetite – particularly for older, regional pubs – increasingly penalises structures not up to code or in less-than-ideal condition.
Most financial institutions require insurance as a condition of the loan, but research by QBE found 62 per cent of the more than 600 small businesses surveyed likely don’t have the right insurance in place to protect themselves.
Some regional pubs have been forced into a stalemate, unable to open the doors as they cannot get insurance, but also unable to sell.
Policies have doubled and tripled in price within a modest tenure, often without any reason provided; Bill Johnston of the Duchess Hotel told the ABC he paid a quarter of a million dollars in premiums between 1999 and 2020, only to be told this year he could not get anyone to cover him, and if he could it would likely cost up to $100k per year.
The fact is, if a business has had the same insurance policies in place for a long time, the circumstances will likely have changed, and the policy may now be too little or too much.
For this reason, it is considered good practice to review policies each year – and whenever there are significant changes, such as to: stock on hand, staffing levels, increased or decreased turnover, changes in ownership, or operational issues including new assets, risks or products and services.
The benefits can be multi-faceted, but centre around optimising the price paid for the right coverage, and payment circumstances, being yearly or in instalments.
Older venues may see special conditions imposed that could actually help reduce the risk liability.
“We are seeing underwriters asking for thermographic scans or building insurance surveys prior to providing a formal insurance quote, or as a condition of the policy,” replied Allan Sudale, pub insurance specialist with Reliance Partners.
Sudale suggests the average pub policy is in the vicinity of four years old, and in the lead-up to the end of financial year says it is important, for best results, to allow a few months to review insurance options before policies expire.
A policy review process typically involves meeting with clients to discuss changes in their business, and creation of an action plan with recommended adjustments.
“June is the busiest month for insurers, with a lot of businesses renewing their insurance policy before the end of the financial year,” adds Sudale, “so it is important to get in early and review your insurance with your broker as soon as possible, to allow them to get you multiple quotes.”
This information is general advice only and does not take into account the objectives, financial situation or needs of any person. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.
