Insurance hikes are causing huge economic hurt to hospitality sector

Premiums on insurance are contributing to the enormous cost pressures which small businesses face. According to Deloitte, 46 hospitality businesses became insolvent in the first three months of 2024, an increase of 142pc on the same period in 2023.

And there is no doubt that insurance premiums, along with the 13.5pc Vat rate plus increased labour costs contributed to the fact that over 70 food service businesses closed in February of this year alone – with a loss of 1.500 jobs.

In terms of insurance, data from the National Claims Information Database (NCID) published by the Central Bank showed that the average cost of settling public and employer liability claims through the Injuries Resolution Board (IRB) was down by one third in 2022 compared to 2020 – however average premiums increased by 8pc in 2022.

In response to the report, Michael Magner, the newly elected president of the Irish Hotels Federation (IHF), called on the Government to ensure the savings made by the insurance sector are passed on in the form of reduced premiums for businesses.

A recent survey of the federation’s nearly 1,000 hotel and guesthouse members showed that 84pc of them were concerned about the impact of insurance costs on their business over the next 12 months, and that between 2020 and 2022 there was a 24pc increase in the cost of insurance premiums for the hotel and guesthouse sector.

Mr Magner went on to voice concern at the lack of savings being passed on to his sector as a result of recent reforms introduced in the insurance industry. Hoteliers are finding it very difficult to pass this extra cost onto consumers at a time when they are suffering from high levels of inflation in the economy.

Hoteliers believe that many of the cost pressures facing their sector are within the sphere of influence of the Government – including the Vat rate, increases in the minimum wage, increases in paid sick leave and upcoming pension auto-enrolment costs.

They feel insurance costs are just another issue on which the Government needs to step in in order to ensure the insurance sector passes on the benefits of decreased claims by way of decreased premiums for businesses.

The Supreme Court ruling last week – that personal injuries awards guidelines, which were introduced three years ago, are to remain in place – should also add to the justification of passing on the benefit of lower settlement costs to businesses.

There have also been calls to mitigate the level of unjustifiable personal injury claims.

While a fair and proportionate personal injury system to recognise genuine claims is essential, those claims where there is no negligence on behalf of the business need to be eradicated – as it is suggested that these extra costs are simply passed on to the policy holders by way of increased premiums.

An inordinate amount of time and money is also spent by businesses defending these claims.

Hoteliers, restaurant operators and publicans are finding it more and more difficult to sustain insurance premium increases yearon-year in a cost environment which is making it difficult to operate, or even survive.