Risk Management

Risks in Leisure

The leisure and tourism sector covers a wide range of activities from hotels, restaurants and pubs to cinemas, theatres, museums, gambling and sports clubs.

Depending on how the industry is categorised, it is estimated to be worth between £75b and £100b to the UK economy and employs three million people in over 350,000 companies.

By 2009, it is forecast that we will spend £26b on our favourite pastime, eating out. The size and diversity of the sector requires a thorough understanding of the risks involved and the market conditions.

Pubs, Restaurants, Hotels and Shops

Locations and construction of pubs and bars can vary considerably from rural, traditional pubs to city clubs with live entertainment and restaurant facilities. Many hotels are converted from older buildings which may have wooden floors and interiors that increase the risk of serious fire and many are located in exposed or coastal areas. Given that there are often large sums insured involved, hotels present a considerable fire, storm and flood risk.

Risks

Liability hazards include slips, trips and falls, inappropriate actions by door staff, noise and assault risk to staff. Considerations regarding locations, construction and the provision of food are similar to those of restaurants. Adequate maintenance of stairs, walkways, seating, cooking equipment and electrical installations is crucial.

There must be adequate evacuation procedures in place.

Consideration must be given to places which host other events as the size of attendance, construction of temporary seating and stands, sound equipment rigs and the hiring of temporary staff will all have a bearing on the terms offered by insurers.

Commercial kitchens are the source of most fires, much of the risk and underwriting criteria associated with cooking ranges and restaurants will apply. Composite panels in large centres can reduce the spread of fire from the kitchen.

Adequately trained and qualified staff, together with a proper maintenance programme, can lessen the risk of slips, trips and other injuries caused by negligence.

Business Interruption

From a business interruption perspective reliance on particular facilities or activities for revenue can be an issue as even a relatively small material damage loss such as a kitchen fire or damage to the swimming pool can close the facility, resulting in a drop in bookings and revenue.

Summary

Understanding all types of facilities on offer is vital in deciding whether to accept a risk and at what terms with which insurer to place each client with.

Whilst price competition increases in the sector, the speed and efficiency of an insurer's claims service must be a major consideration for all leisure risks. Outstanding claims will lead to increased premiums.

The leisure sector undoubtedly presents a distinct set of underwriting challenges. A detailed and realistic disaster recovery programme can help the business mitigate potential losses and is a positive sign that the client understands the hazards which makes it more attractive to underwriters.

May 2007