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Hotel Association of India (HAI) has asked the government to intervene to restore insurance premium rates for hotel properties to FY 2018-19 level, stating these have been increased by over two-and-half times by re-insurers. In a submission to Finance Minister Nirmala Sitharaman, it has highlighted that there has been a steep rise in insurance premiums for hotel properties in the last few years, putting all hotels at par without offering flexibility to insurance companies to quote according to the risk category of the insured.

Hospitality industry body said re-insurers provide financial protection to insurance companies handling risks that are too large for insurance companies to handle on their own thereby making it possible for them to obtain business that they would not otherwise be able to. It said the two-and-half times increase is putting additional pressure on hotel chains, especially those who have invested a lot in safety and preventive protocols. It also said 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.

HAI claimed that the increased premium rates put all hotels at par and do not differentiate between the quality of risk undertaken, as no flexibility is offered to insurance companies to quote according to the risk category of the insured. Due to this, it said better-managed hotel properties that have invested more towards safety and preventive measures towards various risk exposures are charged the same premium rates as others. According to the body, insurance premium rates for property insurance comprise parameters like fire, lightning, explosion, aircraft damage (FLEXA); natural catastrophe loss (earthquake and storm tempest, flood inundation); loss of profit/business interruption (LOP), and terrorism damage cover.