What’s at stake if insurance companies turn their backs?

The event set out to celebrate our exciting, diverse and vibrant sector and raise awareness of the enormous contribution English tourism makes to the UK economy. The event has now been postponed until the outbreak of Covid 19 has passed.

“Making up 80% of the UK’s visitor economy, English tourism generates £106 billion a year, supports 2.9 millions jobs and is a major employer of school leavers and young people, as well as an incubator for entrepreneurs and innovation.” Visit Britain.

The latest regional economic analysis of Cumbria’s tourism industry showed the sector to be worth more than £2.9 billion to the local economy and supporting almost 65,000 jobs. 

Just a few months ago, it would have been impossible to believe that an industry sector contributing so much to both the economy and cultural fabric of the country would be decimated almost overnight. However, as with so many things over recent weeks, the reality is more extreme than most science fiction plots. Hospitality businesses across the country now stand oddly silent with millions of livelihoods at risk, both within those businesses and the millions of local suppliers who rely on the trade.

Admittedly, much has been put in place by the Government with impressive speed and these measures will undoubtedly support many businesses through the immediate crisis. Loans, tax relief, payment plans and furlough schemes will help leisure industries protect cash in the short term, however, the impact of any deferred debt should not be discounted when planning economic recovery.

Business Insurance Protection

Hospitality businesses are now also looking to the insurance sector to step up, stand by their policies and pay out to support them through the current crisis. However, insurance companies seem to have unilaterally taken the decision to turn their backs on their clients in the darkest of times. It is perhaps naive to expect that a basic Business Interruption clause would cover the current situation, however, surely there could be no clearer example of Restricted Access than when access is prevented by order of the Government? So why are businesses across the country receiving a flat refusal to all current claims?

Is this a case of insurance companies failing to deliver on promised (and paid for) security and simply feathering their own nests at the expense of others? Or is it that the insurance systems we’re relying on are not fit for the modern world and the current pandemic is simply exposing the shortcomings? 

Although for many of us it has felt as though recent events have come out of the blue, for years Bill Gates has been warning about the risk of a deadly flu-like pandemic and arguing that systems and societies were not prepared. And Gates is not alone: Infectious disease expert Michael Osterholm; Virologist and flu expert Robert G. Webster; Dr. Luciana Borio of the former White House National Security Council were among the many other specialists who predicted an upcoming flu pandemic.

With this in mind, undoubtedly larger businesses with teams of expert advisers have planned for this eventuality within their intricately crafted insurance policies. However, smaller businesses who don’t have the luxury of such advisors have taken the advice of their insurance companies and paid premiums in good faith, assuming that insurance companies had an all important eye on the future nature of risk.

Whatever the reason for the failure to support businesses, the UK can not afford for the hospitality sector to be abandoned by the insurance companies as is happening now. This is an industry that employs approximately 9% of the UK’s workforce - there is simply too much at stake. 

Complete the survey and share your experience here: Cumbria Tourism Business Impact Survey 

If you are a LDHA member or a soon to be member, as part of the Lake District Hotel Association we have created dedicated support groups to help and share ideas on how best to get through this, together.