The insurance sector is alarmed by the avalanche of lawsuits filed against hotel establishments this year.
According to information from the Secretary of State for Tourism (SET), the problem is acquiring an alarming dimension (initial valuations already exceed 50 million euros). According to the SET version, regardless of the actions that can be undertaken at the national level, the medium-term solution should go through a modification of British legislation itself.
From our experience in the sector, we have observed that the origin of the claims that are currently being communicated is greater than one year. This could mean that there is a hitherto unknown volume of claims being processed.
Recently there has been an alert from the Gov. UK “Spain travel advice. Safety and Security section (holiday sickness insurance)”, which warns that there has been knowledge of an increase in “claims management companies” that target tourists to make false claims regarding sickness on vacation , and that you must be aware that this fraudulent behavior is illegal and constitutes a crime in Spain, for which you may incur penalties such as large fines and even imprisonment.
Are these facts covered by the insurance of the establishments?
Each company has its own insurance contract, which cannot be generalized, but there are two aspects of the contracts that can greatly limit the coverage of the claimed events:
- Territorial scope of coverage, it is the geographical delimitation of said coverage, regulated in each insurance policy, in relation to:
-
-
- Place where the events originating the claim occur. This matter would not present a problem, since the usual insurance covers at least the events that occurred in national territory.
- Jurisdiction where these facts are judged. This matter would indeed be a source of possible conflicts. As a general rule, the jurisdiction that is included in many of the contracts are exclusively Spanish courts, which could motivate the exclusion of coverage by the insurer.
-
- demanded figure, would define who is the company sued for the facts. We must take into account the following:
-
- Civil liability insurance in Spain acts in the event that the responsibility of the insured is proven for the damages claimed by an affected third party. The accreditation of these facts would be protected on the basis of a final judgment. In cases where said responsibility is clearly understood, the insurer negotiates compensation, without the need to go to trial.
- The usual pattern of the demands that are the object of this article does not imply a prior demand towards the hotel, but rather a postscript demand to the tour operator, normally British. The subsequent process would be limited to British courts, as it is a claim against a British defendant (tour operator). In addition, at least until now, the main interest of the tour operator has been to reach a compensation agreement with its client, this would create a new source of problems for the contracted insurance coverage, given that the hotel is not part of the process as it does not appear as a defendant.
- The final phase of the process further complicates the management of the hotelier, given that the tour operator usually tries to execute the clauses of the contract signed with the hotel, and withdraw the amounts of compensation from the balances to be reconciled with the hotel. There is an insurer that is negotiating and dealing with this type of event, but they usually reject it as it is a contractual agreement between companies
What will happen to the insurance contracted by hoteliers?
Insurers are already taking action in the face of these facts, regardless of whether or not they reject coverage for this type of claim. Significant increases in the premium at maturity, the establishment of larger franchises, or in some cases cancellations are being reported.
The added problem is that any hotel with a history of several claims will not be viewed favorably by a new insurer, regardless of the truth of the facts claimed. Upon requesting data on historical claims, the hotelier should communicate their actual data on claims, if these were very high, there would be a risk of being rejected by most market insurers.
At Canarisk we provide advice to adequately anticipate the risks of our hotel clients, with solutions adapted to this problem