Mumbai, India (CU)_ The hotel association of India (HAI), the Indian hospitality industry’s top body, has sent a letter to finance minister Nirmala Sitharaman to express concern about the sharp increase in insurance premiums for hotel properties over the last few years, as many reinsurers, including the state-owned General Insurance Corporation (GIC Re), increased the premiums by around two and a half times as compared to the fiscal year 2018-2019.
According to the letter, they requested the government to restore insurance premium prices to the levels they were in effect during the fiscal year 2018-2019. Previously, insurance firms gave reductions on property insurance premiums depending on their own underwriting criteria. According to the letter, “Due to this, better-managed hotel properties that have invested more towards safety & preventive measures towards various risk exposures are charged the same premium rates as others”.
According to the association, insurance companies are not permitted to quote different rates to hotel properties based on the risk category of the insured, effectively putting all hotels on an equal footing and eliminating the possibility of differentiated premiums based on the quality of risk assumed.
The tourist and hospitality industries have been highly damaged by the Covid-19 outbreak, which has led to financial losses. MP Bezbaruah, Secretary-General at HAI, said, “It is a time for providing incentives to the sector to revive and grow but the current very high insurance premium rates as compared to pre-FY 2018-19 is a major disincentive”.
Bezbaruah added, “Their two-and-half times increase is putting additional pressure on hotel chains, especially those who have invested a lot in safety and preventive protocols. During the time when the industry is showing signs of recovery, such premium rates imposed on the sector is a setback for the entire industry”.
