Insurance Costs Hotels $25 Mil Per Year
With few insurers left in the market, and those left frightened about a major hurricane affecting Bahamian properties, hotels are subject to high premium rates that have remained static for years.
Major Bahamas-based hotels continue to be hit by rising insurance costs as the insurance and reinsurance markets continue to contract, Robert Sands, executive vice-president of the Wyndham Nassau Resort and Crystal Palace and Casino said yesterday. He added that the 12 members of the Bahamas Hotel Association (BHA) pay as much as $25 million per annum in premiums.
Mr. Sands said that following a major hurricane strike, many insurance companies have gone from having to pay out enormous sums from claims filed for catastrophic insurance relating to wind and hurricane damage.
With few insurers left in the market, and those left frightened about a major hurricane affecting a significant number of Bahamian properties, hotels are subject to high premium rates that have remained static for years.
Mr. Sands said that if hoteliers are to bring their rates down, they need to be more prepared. To reduce liability, buildings must be in a state of readiness and have a strong ability to withstand hurricanes and other eventualities. Hotel mangement must ensure their hurricane plans are well documented, easily accesible and can be articulated quickly and efficiently to employees and guests.
In addition to the Bahamas being in the middle of the hurricane zone, there were a number of other factors that place hotel properties in the high premium range. Most properties are high rise, are situated on the coast, exposing them to wind and water surges and many are valued at millions of dollars.
The high cost of insurance can severely impact operational costs and for some properties can be the difference between continuing operations and closing their doors.
Source: Yolanda Deleveaux, The Tribune