JD Wetherspoon asks landlords to cut insurance costs

The firm has already saved around £1m per year after securing new deals with around three quarters of its landlords, chairman Tim Martin said.

It follows a review of the company’s property portfolio. Martin said: “We just noticed that we were paying a lot more for insurance in pubs where we were tenants than where we were the freeholders.

“We’ve gone back and got our own quotes and shown them to the landlord; they’ve been between 25% and 75% lower than the average.”

Martin said the company has had co-operation from “the great majority of landlords” over the issue. “It’s not in the interests of anyone for the tenant to over pay; it’s not even in the landlord’s interest. The more enlightened ones understand that.”

Asked if Wetherspoons would take legal action if it was unable to secure insurance reductions, Martin said: “It will be the only thing we can do if we don’t reach agreement. But I’m sure we will reach agreement with the one or two landlords that are reluctant.”

Trade consultant Phil Dixon was not surprised to hear of Martin’s concerns and said he doesn’t understand why the cost of insurance varies between different landlords.

“It’s a very murky world,” said Dixon. “Why can one licensee insure their pub for less than a company with thousands of pubs?

“Why is it that when a pubco sells a pub to a family brewer that the family brewer can insure the pub for less? I still don’t know the answers.”

The Association of Licensed Multiple Retailers’ strategic affairs director Kate Nicholls added: “Insurance costs are a significant overhead for all operators and, while everyone wants to make sure that they are adequately covered, no one wants to be paying over the odds and certainly commercial landlords should not be making  a profit from insurance provision.”