Pubs paying 'over odds' for insurance

An insurance broker has warned that pubs are paying over the odds for insurance because they are locked into long-term contracts while premiums are declining.

Marsh & Company is warning venues not to sign up to lengthy insurance policies locking them into unfavourable rates.

Marsh Bar and Club Insurance managing director Rob Marsh said: "We have noticed a massive increase in the number of bars and clubs that have found themselves tied into long term agreements with other insurers - many not knowingly.

"The insurance market is notoriously volatile and premiums are declining, especially for the leisure industry. The premiums for long-term agreements are set at the current market rate, which means that venues are paying above the odds for an indefinite period."

Insurance for most pubco tenants and lessees is set by the pub company.

Trade consultant Phil Dixon called for greater transparency in premium calculations by pubcos.

Dixon asked: "How can a company with 200 pubs insure for half the price of one that has several thousand?

"Some of the pubcos need to consider a bit more transparency in this murky area."

Last September Punch angered some of its licensees by increasing premiums by 5% to 30% for about 12% of its estate.

Punch property and strategy director Neil Griffiths said increases largely affected recently-acquired sites that were under-insured. He added that Punch's policy covers extra areas such as insurance for accommodation and against terrorist attacks.

On the issue of whether premiums have fallen recently, Griffiths said: "We've had to increase premiums overall but not at the same levels as we've had to do in the past.

"If people don't review their premium every year and shop around they might lose out."