NATIONAL REPORT— While it may not make paying the bills any easier or more palatable, hoteliers can perhaps take some solace in the knowledge some of the nation’s leading insurance brokers believe the seriousness of some policy issues have may well be blown out of proportion. In response to HOTEL BUSINESS® queries about the impact of terrorism, mold and— more recently— severe acute respiratory syndrome (SARS) on the pricing of policies today, both Marsh USA Senior VP/Global Hospitality Practice Leader Janice Schnabel and Arthur J. Gallagher Co. Managing Director/National Hospitality Rich Clark maintained these concerns have become virtual “media darlings.” Accordingly, it was suggested these issues may well be undeserving of the attention they have commanded of late. “Thanks to the dictates of the federal government, terrorism insurance is available and— with the exception of a few key, high-risk areas like New York, Chicago, Los Angeles, Washington, D.C. and perhaps San Francisco— not really all that costly,” said Schnabel. “The most important aspect of this coverage,” she added, “is the fact hoteliers have to know what their lenders’ covenants demand. If it’s stated the property has to carry terrorism insurance, then there’s no way around it— it has to be done.” Meanwhile, Clark said he might add “trophy properties” to the list of those finding terrorism insurance to be on the pricey side. Overall, however, he contended: “It looks like the cost [for this coverage]is coming down.” Turning to mold issues, Clark labeled the existence of such a condition “a problem… but probably not really a crisis of epic proportions.” As the Gallagher executive pointed out: “I’ve been in this business a long time, and I’ve yet to see any [hotel guest]die— or even get sick— as a result of a short stay on premises with a mold problem. “It seems far more reasonable,” he added, “to note mold coverage is a necessity because of the liability litigation popping up all over the country with regard to the alleged ‘injurious nature’ of this condition.” Correspondingly, Schnabel suggested mold has obviously become “a big media buzz-word.” On the other hand, she admitted mold clean-up can be very difficult— and sometimes seemingly nearly impossible. For that reason, Schnabel noted mold exclusions have become fairly commonplace, so hoteliers have to have a separate policy (or coverage) in place. Then there’s the newcomer to the insurance worry list— SARS. “This is a very new issue,” Clark said, “one that definitely needs to be looked at further going forward. But as I see it, we [as an industry]need to get past the current hype; we have to realize SARS has not really had any impact on the hotel business… yet.” To this end, Schnabel agreed any decision-making (by insurers) is more-than-likely still some ways off. “For instance,” she said, “along these lines about all we’re doing is offering up advice on what to watch for and how to respond to this situation if it comes up. “As such,” she explained, “all we can really say at this time is hoteliers would do well to work with their local health departments and follow universal precautions. In the long run, it seems like much of this would boil down to a matter of common sense.”
