The last few years have not been particularly kind to the hospitality industry. The credit crunch, high unemployment rates and lower overall disposable income have meant Americans aren’t feeling so keen on travel, and hotel stays have dropped.
Despite that reluctance, high-end, all-inclusive resorts are humming along just as steadily as they always have.
“There seems to be a plethora of franchises and establishments that want to offer something unique and unusual, but cater to people of above-average income who spend more the longer they stay on the premise,” said Ron Norton, senior vice president of the leisure division at K&K Insurance. “With a wide variety of restaurants and activities onsite, not many resorts go out of business.”
Recognizing the opportunity in resorts and wanting to solidify existing programs at K&K, the sports and recreation insurer launched its resorts program in June. Covering exposures from horseback riding to high-end spas, the program offers policies including general liability, property, commercial auto, excess liability and workers’ compensation in select states.
Now K&K is focused on letting agents and brokers know just what a fun, potentially lucrative opportunity these accounts can be.
The appeal of destination resorts are the activities, fine dining and health treatments offered onsite. It’s a great edge for resort owners, but can be a headache from a risk management and insurance perspective.
Some particularly problematic additions Norton has seen recently are ziplines and canopy tours—high altitude cables with a suspended harness allowing a person to slide down for thrills and sight-seeing.
“These are fun, but people do fall off when they’re not properly clipped in or when weight restrictions are ignored,” said Norton. “We’ve had all kinds of losses on ziplines.”
Because ziplines and similar activities are often added as an afterthought, many times losses occur when the zipline is not properly covered. Agents can play a crucial role in staying in touch with their accounts and ensuring coverage is complete and up to date.
The workers’ comp component
Workers’ compensation is a given in just about every states, but coverage is particularly important for resort employees.
Norton says there are potential legal questions that emerge when a member of staff is injured on the premise.
“Were they operating in the course and scope of their employment, or were they just there enjoying the day and someone called them over to give them a hand?” Norton said. “If they get injured, there will be a lot of pointing fingers between the GL carrier and the workers’ comp carrier. That’s a clear benefit of having all lines with the same carrier.”
That’s a practice K&K follows with its own resort program. When all lines are covered by the same carrier, claims tend to be resolved more clearly and more quickly.
Partnering with experts
Norton stresses that agents working with resort accounts do not need to be experts. Instead, they simply need to come to knowledgeable underwriters with a good relationship with the insured.
They also need to be willing to provide as much information as possible to underwriters.
“Some agencies have a tendency not to be clear on the areas of coverage they are not familiar with,” he said. “With business income limit, they seem to just fumble through it, trying to calculate worst-case scenarios.
“They say, ‘Here is the limit and deductible’ and expect to be quoted on that.”
Instead, agents need to be more comfortable speaking with underwriters about specialized areas of coverage and the questions they should be asking in order to get a better quote.