NATIONAL REPORT— The possibility of court-ordered insurance-claims relief may be looming larger for U.S. hoteliers attesting their operations and subsequent revenue levels— if not their physical plant— have been deleteriously impacted by the terrorist events of 9/11 and their aftermath. According to at least one litigator, many hotels— and other businesses— have virtually been “threatened” by their insurance carriers vis-à-vis any claim they might file for collateral damage precipitated by the events of 9/11. Apparently, these “threats” go well beyond the inevitable hike in premium rates, extending to promises of out-and-out denials of such claims, as well as suggestions such claimants risk finding their coverage dropped altogether. Given this scenario, David Steuber— partner and co-chair of the Insurance Recovery Group of the law practice of Howry Simon Arnold & White in Los Angeles— is convinced the eyes of this country’s lodging industry will be scrupulously following the progress of a lawsuit his company has filed on behalf of Clark County (NV) and its Department of Aviation against Factory Mutual Insurance Co. (FM). Essentially, the complaint by the owners of McCarran International Airport alleges FM denied a substantial, legitimate business-interruption claim directly related to Federal Aviation Administration-directed airport closures immediately following the Sept. 11 attacks. Moreover, it was charged the insurance company not only refused to make good on its obligations as covered by the existing policy, it went so far as to actually cancel the policy, despite it having had more than a year to run. Calls to FM were not returned by press time. The fact is, hotels in many instances can find themselves facing the same situation as that unfolding in Clark County, Steuber said. That may be why he claims a considerable number of hoteliers have not seen fit to file claims regarding “downstream/ripple effect” damage, even though their failure to file such claims or obtain extensions from their carriers in a timely fashion (i.e. by Sept. 10 for those policies mandating a one-year filing period) could effectively bar them from ever hoping to recover for losses sustained. As Steuber explained, it can often be difficult to make a case for damages brought about by an event that has not directly or physically impacted one’s lodging property. However, that does not make undue financial hardships and unexpected business interruptions any less real for those properties suffering them— in this case, that could certainly encompass airport, big city and fly-to destination hotels. In terms of the “threat” as served up by insurance companies, Steuber said it has so far proven to be fairly effective. In their quest to substantially limit the number of claims they have to handle and/or satisfy, hoteliers are being forced to weigh the cost of eating their losses against the down-the-line expense, and upheaval, brought about by having their premiums significantly hiked and/or their policies terminated, he said. In line with the current insurance situation, hoteliers could effectively expect to be paying more and getting less, Steuber said. At a minimum, policy language will become significantly clearer and more restrictive, he said. On this note, some agreement was forthcoming from Fred Schwartz, president of the Asian American Hotel Owners Association. The organization’s membership has been especially vocal about being “hit hard by rate increases… with some premiums being hiked 25% to 50%, or more,” Schwartz said. Presenting a somewhat different perspective, American Hotel & Lodging Association VP/Government Affairs Kevin Maher said he “hasn’t heard too much” from AH&LA members, particularly with regard to heavy-handed threats forthcoming from insurance companies. However, his belief is that the industry’s best chance for relief may well be through federal terrorism-insurance legislation— something he and his fellow committee mem
