Providing coverage to the hospitality industry isn't just a matter of insuring the buildings, but also who works in them and how they act.
Hotels and other hospitality industry entities face a significant risk in how they deal with their employees, how those employees deal with one another, and how they interact with customers.
Employment practices coverage should play a major role in protecting a hospitality business, according to Robert Cap, associate product manager for EPLI and nonprofit directors and officers coverage at Shand Morahan, a part of the Markel Group.
"There's a whole litany of things that can go wrong [in employment practices]. The hospitality industry is especially vulnerable because there's a little more turnover than you see in other industries," he explained.
He added that many hotels use part-time workers and seasonal or other temporary help, which increases their employment practices risk.
Like other areas of hospitality coverage, Mr. Cap said more players are looking to enter the market. "You're seeing more competition," he said, noting this is especially true for smaller risks.
Most of these are operating in the nonadmitted market, but Mr. Cap said larger companies are also looking to grow their presence in the standard market by covering the larger risks of national hotel chains.
In looking at a risk involving employment practices, Mr. Cap said his company examines how a hospitality entity is managed, and who is in charge. "We look at the quality of the management," he said. "Do they train employees on practices issues? Is there a manual? Do they say, 'Hey, this is what you're supposed to do?'"
Markel offers a program for hotels, which the company markets to smaller entities with 500 or fewer employees.
Typically, Mr. Cap said, this would involve a business with a single location, or at most a small chain or franchisee with two or three hotels. The program offers coverage for claims by employees relating to their pay–such as not being paid overtime or not being given paid leave, or leave mandated by federal law.
In addition, the program covers a hospitality entity for claims of discrimination or harassment–which, he noted, can happen to firms of any size, even those with one employee. "One employee makes a comment about another employee's background, or a boss could say something to their only employee," he said.
The location of a business can also play a major role in a company's rates, Mr. Cap noted, citing the varying regulations and laws between states as the cause for these differences.
As an example, he noted that a business in California would have significantly more risk than a similar entity in Iowa, because "California has more laws on the books that favor the employee" in seeking compensation from an employer for injuries or other problems.
However, even given these problems, the hospitality market is attractive, he said, because the hotel industry is doing fairly well. "We're seeing more companies exploring the industry and trying to write the business," he said, "because, obviously, the industry is growing."
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