As the hospitality industry continues to recover and evolve post-pandemic, insurance brokers and underwriters are navigating a rapidly shifting landscape.

RPS Broker Randy Velin and Arizona-based Casualty Broker James Ward share how regional market dynamics are shaping coverage options, underwriting requirements and pricing pressures across the country.

High-Risk Areas, Older Structures Get Additional Scrutiny

"Underwriting requirements have become significantly tighter in states like Minnesota, South Dakota and Montana — especially in the property insurance market. Many carriers are asking for larger wind hail deductibles in hail-prone areas like southern Minnesota," says Velin. "And in Montana, a fire report is mandatory for all accounts located in fire-prone areas."

"If a building hasn't been completely updated in 25 to 35 years — roof, wiring, plumbing, heating — carriers don't want to insure it on a Special Form. Specific hazards like cast iron water lines or certain electrical systems — for example, Stab-Lok or Zinsco breakers, fuses, aluminum wiring, and knob and tube wiring — are often deal-breakers."

Arizona is experiencing mixed activity on the carrier front despite being a favorable zone for catastrophic risk with minimal hurricanes, tornadoes and hail.

"Many carriers are going into states where it's a safer bet," Velin said.

Raising the Bar on Liquor Liability Risks

Texas is one of the most challenging states for hospitality businesses, particularly regarding liquor liability.

"Carriers have pulled back from providing capacity," explains Ward. "Where they once would write million-dollar liquor limits, carriers might only insure a risk up to $500,000. Additionally, more carriers are opting to use reinsurance, making it more expensive."

Diminished capacity stems mainly from the state's strict dram shop laws, which place heavy legal responsibility on bars and servers.

"It's very easy to put the onus on the bar owner or the individual server in Texas," notes Ward.

Arizona is also a tough state when it comes to writing Liquor Liability. "It is not as challenging as in Texas," says Ward, "but on that spectrum."

In contrast, Nevada has a more lenient legal environment regarding liquor-related liability. There are no dram shop laws, and bars and restaurants are typically not civilly liable for any injuries or damages if a customer they serve gets into an intoxication-induced accident.

"This legal framework has allowed for market availability and better rates, even in a state known for its entertainment industry," says Ward.

However, risks remain in Nevada, with more of a focus on assault and battery, human trafficking and firearms exposures, according to Ward.

The Growth of the Excess and Surplus Market

Across the board, Velin and Ward are seeing increased submissions to the Excess and Surplus (E&S) market due to a firming hospitality insurance landscape.

"A lot of the standard markets are getting out of hospitality," Velin says. "Smaller regional carriers are non-renewing their accounts. We are seeing an influx of business coming to the E&S market."

Ward echoes that sentiment: "I've seen many standard markets exiting, especially in the liquor space. It's much more expensive now, and that's always a shock to the client."

As the industry grapples with these challenges, communication remains key.

"Brokers should have real conversations with their clients to find out what they need and can afford," says Ward.

Contributor Information