Insurance companies respond to unprecedented times...
It has been an unprecedented period for holiday park operators with challenges of biblical proportions as they faced floods, a global plague and a stop-start famine then feast on bookings. It is a period that has also challenged insurance cover suppliers to step up for their holiday park customers. Given the extraordinary circumstances of Covid, one of the hottest insurance topics has been Business Interruption (BI) cover. Long-awaited clarity about how BI claims should be handled came with the publication of the Supreme Court judgement on 15th January 2021. Not all customers will have the specific cover the test case referred to, which means that not all customers’ policies will be expected to cover Covid. The process of assessing BI claims is a complex one, and there are steps that need to be followed in order to submit a valid claim. Specialist insurers are working with the holiday trade who had the relevant policy coverage to confirm and assess their claims as quickly as they can. Champions of the Park Protect Scheme, David Moffat, Associate Director, of PIB Insurance Brokers says: “Unfortunately the pandemic has coincided with a significant hardening of the insurance market with insurance rates for certain types of insurance increasing markedly in recent months.
“This often happens at a time of uncertainty as it usually comes with increases in claims and the insurance market reacts accordingly,” David explains. “Insurers have seen increasing claims costs, particularly from natural disasters but also due to an increasingly litigious society,” David continues. “As insurer profitability declines, they either decide to exit unprofitable markets or increase premiums.” Meanwhile, Leisuredays have been working hard, often behind the scenes: “We worked hard to educate caravan and lodge owners that their units remained at risk during lockdown using press releases, online content and through our advisers,” says Gareth Walker, Head of Leisuredays Development. “Covid, may have meant parks were closed for long periods but the winds still blow, rivers still flood, thieves still steal and pipes still freeze,” Gareth continues. “We calculate over 90% of claims could still occur even when units are unoccupied and parks closed, with storm and flood, fire, vermin damage and theft topping the list of claim types,” says Gareth. With parks’ income drying up overnight, it was clear that specialist insurance companies needed to do whatever we could as quickly as possible to help customers through the lockdown period. Compass were quick out of the blocks, developing a tailored product, Compass Essentials, which was offered to all holiday park businesses from May 2020. The product was designed to ensure all park customers, existing and new, could be offered a discount or refund of some sort. It largely worked on the premise that parks’ insurance needs changed, as a direct result of being closed to the public. For many, this meant liability covers could be reduced without putting the park business at risk. By further eliminating less critical covers such as frozen food cover and accidental damage, many parks were able to secure immediate premium refunds of up to 25%.
Several Compass insured parks have experienced flooding in the past six months, and a few have been very badly affected. Over half of the claims that Compass handles relate to flood and storm. One of the biggest lockdown issues for holiday home owners has been their ability to comply with insurance policy conditions. Holiday caravan owners also need to think about their sums insured as pressures on the supply chain mean that the cost of replacing caravans is likely to increase sharply, if only for the next 12 – 18 months “Coronavirus has had a significant impact on the way in which holiday caravan and lodge manufacturers can operate,” Richard Walker, of Compass points out. “Coupled with supply chain issues, this has resulted in fewer units being produced at a time when staycation bookings and new caravan/ lodge sales have boomed. “The high demand for the units that are available could potentially impact any total losses experienced by parks and their customers in the next year or so. “The fact that the dearth in available units is driving up prices may also be relevant, as will the increased costs of many of the materials used in caravan/ lodge construction,” Paula adds. Once parks re-opened, Leisuredays say they dealt with a record number of insurance enquiries as parks enjoyed healthy sales of new units.
“For those suffering temporary financial difficulty as a result of Covid, we were able to defer payments or waive cancellation charges,” says Gareth. “If a customer asked to cancel their policy but was intending to keep their unit uninsured, we would do everything possible to keep them insured because the last thing they needed on top of everything else was an uncovered bill for a caravan repair or replacement. The closing of parks at the end of October also brought difficulties for customers to drain down their units for winter in line with insurance policy terms. “We were able to offer flexibility for customers to arrange for their parks to drain down within an extended timeframe yet maintain full cover until this was completed,” he adds. Leisuredays set about making it even easier for park customers by offering a new online renewal portal so they could renew 24/7. Gareth explains: “To ease any stress, we provided an up to 10% uplift to policy sum insured at no charge. “This was beneficial to customers on a new for old policy who have to insure at the price of a brand-new equivalent unit.” In effect, the Leisuredays approach meant the customer could renew and be sure their caravan would be fully replaced with a new one on the park – it also reassured the parks that the customer would have sufficient funds to replace their unit via them.
“If anything, our way of working with parks has worked extremely well during the pandemic,” Gareth emphasises. “Because our parks work with us as Introducer Appointed Representatives they effectively introduce the customer to us for us to quote, then setup and administrate policies. “When parks re-opened in July 2020, many parks were keen to maximise sales so they bundled our free insurance offer with new units as a deal sweetener. “This proved extremely popular for new owners who wanted everything to be provided as part of the purchase package.” Gareth believes Covid has made self- administration of customer insurance even less attractive for holiday park operators. “We’re even more confident the route of introducing to a specialist like ourselves delivers better results,” says Gareth. “Letting a specialist such as Leisuredays do the insurance admin lets them concentrate on their core business. Gareth adds: “We firmly believe they’re in for a bumper season of demand for holiday caravan sales and holidays so they need to make hay whilst the sun shines in that regard – why let insurance get in the way?”
PIB Insurance Brokers
Tel. 01422 358 525