As insolvencies rise and operating costs soar, insurers in the UK hospitality sector are being forced to look harder at the fundamentals: risk controls, business sustainability, and contractual clarity.
"The pressure on hospitality is immense right now," said Richard Foster (pictured), lead underwriter - hospitality & travel at Touchstone Underwriting. "Margins are tight, expectations are high, and the insurance market is looking for signs of resilience."
Foster joined Touchstone as it expanded from a small operation writing residential and commercial property into a specialist MGA with sector-specific capabilities. The growth came organically, he said, after Touchstone's acquisition by Seventeen Group and the arrival of niche schemes such as insurance for travel agents and hospitality businesses.
"What started as a travel sector offering became a gateway," he said. "We began building out hotel and high-end restaurant coverage, bringing in experienced underwriters. Since then, the hospitality book has grown steadily under Aviva."
Touchstone has an established property offering but also excels at providing niche insurance solutions for industries such as travel, hospitality and construction. Foster emphasised the firm's commitment to multi-class underwriting, training staff across disciplines rather than siloing them by product. "It keeps people engaged and makes the company more resilient," he said.
While business pressures intensify, Foster is concerned that some hospitality operators are quietly cutting corners. "While we have strict criteria for the hotel businesses we insure, what we have noticed in certain instances is a drop-off in some internal health and safety standards, not because they don’t care, but because they are stretched," he said.
For underwriters, a lack of documentation poses a serious challenge. "When claims arise, paperwork is everything. Contracts with suppliers, confirmation of liability insurance, documented checks, it all matters. And if a business signs off on supplier terms without scrutiny, they could be accepting liability they shouldn't."
For brokers, this reinforces the need to probe their clients' operational standards and contractual habits. "We rely on brokers to surface these issues early," Foster said. "If something's changed, we need to know."
Beyond operational risks, Foster highlighted key indicators insurers are watching to assess client sustainability: financial reports, credit scores, and even online reviews.
"A hospitality venue with declining or no TripAdvisor reviews is a red flag. It might suggest falling foot traffic or slipping standards," he said. "We also check for county court judgments and poor credit history. These can be signs of businesses struggling long before they go under."
Touchstone also reviews directors' experience when considering cover for new ventures. "It’s not about excluding newcomers, it’s about understanding whether they’ve run something like this before," Foster said.
Here too, brokers play a critical role. "Helping us understand the client’s background and intent can make a real difference in how we assess the risk," he added.
Climate risk has become a major underwriting concern, particularly for flood-prone or coastal properties. "We’re not just looking at today’s exposure," Foster said. "Prudent underwriters are asking what risk will look like five years from now. Does the business have a flood mitigation plan? Have they invested in resilient construction?"
He warned that properties in known risk zones could face higher premiums or exclusions if no action is taken. "Insurers aren’t punishing businesses, they’re pricing for reality. But we do reward proactive risk management."
Litigation trends also add pressure. "Consumer claims are rising, and booking terms and conditions need to be revisited regularly”.
Brokers should consider prompting clients to review and refresh their customer contracts, especially where liability might be ambiguous.
The hospitality sector is showing strong signs of resilience with renewed confidence in long-term planning after the challenges of the pandemic. Foster’s message is one of optimism.
“Venues that are maintaining standards, retraining staff and staying close to their brokers,” he said, “they are setting themselves up for success and continued insurability.”
For brokers, the opportunity lies in guiding clients to meet insurers’ expectations around documentation, resilience and operational transparency.
“It’s about partnership,” said Foster. “We all need to work together to ensure the best outcome for the client which in turn has a positive effect on the hospitality industry as a whole.”
