The hotel association of India (HAI) has written to the finance minister, Nirmala Sitharaman, highlighting the steep increase in insurance premiums for hotel properties in the last few years as several reinsurers, including state-owned General Insurance Corporation (GIC Re) have raised premium by nearly two and a half times they were in FY2018-19. In the letter, they have urged the government to bring down the insurance premium rates to the level they were in FY2018-19.
The association has alleged that insurance companies are not allowed to quote different rates to hotel properties based on the risk category of the insured, thereby putting all the hotels at par and leaving no scope for differentiated premiums depending on the quality of risk undertaken.
“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”, the letter mentioned. Earlier, the insurance companies offered discounts on premium rates for property insurance based on their respective underwriting parameters.
The tourism and hospitality sector was badly hit due to the Covid-19 pandemic, resulting in revenue losses. “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”, said MP Bezbaruah, Secretary-General, HAI.
“There 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”, he added.
