There is no question that the current economy hassignificantly affected the hospitality industry, includinginsurance agents and carriers. When a consumer's disposable incomeis all but eliminated, the obvious first step to preserve cash-flowis to cut back on leisure activities such as vacations and eatingout.

Hospitality may be feeling the pain of this recession more thanany other industry, a fact that's reflected in the industry'sinsurance premiums. It's a vicious cycle: sales are down and so areyour premiums, and business owners are looking desperately to cuttheir operating expenses just to survive.

Prosperity in the hospitality industry is under stress. Be theexpert and support for these struggling business owners. Thefollowing are ways that you can stand out to your clients:
o Help identify loss control areas to mitigate risk
o Assist in reviewing their current insurance protection. Whatcoverages are necessary for their business? What coverages areperhaps non-essential that can be dropped?
o Help them obtain the best value for the lowest cost
o Prepare applicants for increased loss exposures in areas affectedby the recession, such as EPLI, crime and workers' comp
o Discuss premium financing options with your customers and helpthem find it
o Help them review value propositions. Give them options - obtaincomparative quotes - and explain to them their choices, such aslower premiums for less coverage.

Your clients are counting on you to be their insuranceconsultant . Once they have found the help they need in these toughtimes, they're likely to be loyal customers when businessconditions improve.

Replacement of cancelled or non-renewed accounts due to failedbusinesses is a logical action. It sounds easy enough, but where tostart? First, focus on the recession-resistant sectors. People donot cut leisure spending out of their budget entirely; they findways to maintain their lifestyles while spending less. Businessesthat fulfill this need will be more unyielding to therecession.

Some recession-resistant establishments in the hospitalityindustry are:
o Fast-food restaurants with dollar menus
o Budget motels and neighborhood bars
o Sports bars offering the game and happy hour specials

Wherever you can find a deal is where you will find the patrons.These businesses should be your target markets. Buffalo Wild Wings, asports-themed bar and restaurant chain, is a great example of thekind of place to look for on your marketing excursions.First-quarter earnings of this popular establishment shot up 30percent in 2009, defying all recession odds. Consumers are turningto these types of restaurants in an attempt to spend less whilestill managing to get out on the town.

The excess & surplus marketplace is a great home for thesetypes of businesses and others that may be declined by the standardmarket. Some of these include business owners located in olderbuildings who don't have enough money for updates; bars andrestaurants in high-risk strip mall locations surrounded bymultiple vacancies which are more susceptible to crime; start-upbusinesses with inexperienced management, and accounts which havesuffered losses. These are all examples of hospitality industryrisks that could be passed over by the standard markets but fitnicely into E&S.

This soft market won't last forever and the economy willrecover. This has been proven so over and over again throughoutinsurance history. Lloyd's Franchise Performance Director Rolf Tolle stated in 2007 that "mitigating the insurance cyclewas the "biggest challenge" facing managing agents in the next fewyears".

We need to remind ourselves of this insurance cycle to help looktoward a bright future. We have long passed the last hard marketand drifted into what seems like a neverending soft one. Premiumsare low and competition is high. Many insurers have slashed theirrates to unrealistic extents. Standard markets are expanding theirrisk appetite and entering the E&S domain--and as history tellsus, lax underwriting and reckless pricing to gain market share mostcertainly will erode loss experience and eat away at capital. Thehard market will then return.

We have seen evidence of this already in what many have called"the invisible hard market." Supply is decreasing and prices arestarting to come back up; unfortunately, we just can't see it yetin our top lines. However, the time will come when underwritingincome returns. In the meantime, we just have to take advantage ofthe opportunities that you can find by pursuing the right kinds ofbusinesses in an economic downturn. It's up to you to find them andtake advantage of your greatest asset these hospitality businessowners are looking for--your expertise on their insurance.