HK Peninsula hotel gets HK$95m Sars settlement
The owner of The Peninsula, Hong Kong’s famous harbour-front luxury hotel, said on Monday it would receive a HK$95m insurance payment resulting from business lost during the outbreak of Severe Acute Respiratory Syndrome (Sars) earlier this year.
However, Hongkong and Shanghai Hotels, which also counts six other Peninsula hotels in the US and Asia among its properties, said it had not been able to obtain insurance against any Sars-related losses starting next year due to a change in its insurer’s coverage policy.
While Hong Kong’s top hotels could receive more than HK$500m in Sars-related claims for this year, they are finding it difficult to secure insurance against future recurrences of the deadly infectious disease, which killed 774 worldwide and led to unprecedented low occupancy rates among hotels across Asia before it faded out in June.
‘Insurers had to bite the bullet this time [and cover business losses due to Sars] but if they had a choice they wouldn’t want to cover it for next year’, said James Lu, executive director of the Hong Kong Hotels Association, an industry group.
Mr Lu said he was aware of at least eight Hong Kong hotels or hotel groups, including Shangri-La Hotels and Resorts, which were currently negotiating Sars-related settlements with their insurers. He estimated total claims awarded could be ‘HK$400m to HK$500m or higher’.
The Mandarin Oriental Hotel Group said in October it had settled a US$16m claim for business lost due to Sars in the first half of the year. The company also said it had been unable to maintain the same cover when it renewed its insurance policies in July.
‘Coverage for Sars is simply unavailable’, said Kate Kelly, a spokesperson for Hongkong and Shanghai Hotels.International insurance and reinsurance companies are redoubling efforts — first started after September 11 but reinforced by the Sars outbreak — to enforce stricter underwriting rules.
‘A return to underwriting discipline is now commonplace throughout the entire insurance industry’, said Eileen Lim, Asia spokesperson for Swiss Re, a leading international reinsurer.
However, Mr Lu of the Hong Kong Hotels Association said the body hoped the availability of insurance coverage for infectious diseases would improve.
‘Some insurance companies are dragging their feet’, Mr Lu said. ‘Some can be talked into offering [infectious disease] insurance but they are increasing their premiums or lowering their liability limits.’
Allianz, the German insurer, this month started marketing a Sars-specific business interruption policy in Japan to local companies with 100 or fewer employees. The company does not offer any such policies in Hong Kong, according to a company executive. Hong Kong medical professionals on Monday clinched a last-minute deal with insurers to make personal health insurance available to all private doctors in the territory despite Sars.
However, premiums could still jump as much as four-fold, according to Dr Lo Wing-lok, head of the Hong Kong Medical Association.