There is no question that the current economy has significantly affected the hospitality industry, including insurance agents and carriers. When a consumer's disposable income is all but eliminated, the obvious first step to preserve cash-flow is to cut back on leisure activities such as vacations and eating out.

Hospitality may be feeling the pain of this recession more than any other industry, a fact that's reflected in the industry's insurance premiums. It's a vicious cycle: sales are down and so are your premiums, and business owners are looking desperately to cut their operating expenses just to survive.

Prosperity in the hospitality industry is under stress. Be the expert and support for these struggling business owners. The following are ways that you can stand out to your clients:
o Help identify loss control areas to mitigate risk
o Assist in reviewing their current insurance protection. What coverages are necessary for their business? What coverages are perhaps non-essential that can be dropped?
o Help them obtain the best value for the lowest cost
o Prepare applicants for increased loss exposures in areas affected by the recession, such as EPLI, crime and workers' comp
o Discuss premium financing options with your customers and help them find it
o Help them review value propositions. Give them options - obtain comparative quotes - and explain to them their choices, such as lower premiums for less coverage.

Your clients are counting on you to be their insurance consultant . Once they have found the help they need in these tough times, they're likely to be loyal customers when business conditions improve.

Replacement of cancelled or non-renewed accounts due to failed businesses is a logical action. It sounds easy enough, but where to start? First, focus on the recession-resistant sectors. People do not cut leisure spending out of their budget entirely; they find ways to maintain their lifestyles while spending less. Businesses that fulfill this need will be more unyielding to the recession.

Some recession-resistant establishments in the hospitality industry are:
o Fast-food restaurants with dollar menus
o Budget motels and neighborhood bars
o Sports bars offering the game and happy hour specials

Wherever you can find a deal is where you will find the patrons. These businesses should be your target markets. Buffalo Wild Wings, a sports-themed bar and restaurant chain, is a great example of the kind of place to look for on your marketing excursions. First-quarter earnings of this popular establishment shot up 30 percent in 2009, defying all recession odds. Consumers are turning to these types of restaurants in an attempt to spend less while still managing to get out on the town.

The excess & surplus marketplace is a great home for these types of businesses and others that may be declined by the standard market. Some of these include business owners located in older buildings who don't have enough money for updates; bars and restaurants in high-risk strip mall locations surrounded by multiple vacancies which are more susceptible to crime; start-up businesses with inexperienced management, and accounts which have suffered losses. These are all examples of hospitality industry risks that could be passed over by the standard markets but fit nicely into E&S.

This soft market won't last forever and the economy will recover. This has been proven so over and over again throughout insurance history. Lloyd's Franchise Performance Director Rolf Tolle stated in 2007 that "mitigating the insurance cycle was the "biggest challenge" facing managing agents in the next few years".

We need to remind ourselves of this insurance cycle to help look toward a bright future. We have long passed the last hard market and drifted into what seems like a neverending soft one. Premiums are low and competition is high. Many insurers have slashed their rates to unrealistic extents. Standard markets are expanding their risk appetite and entering the E&S domain--and as history tells us, lax underwriting and reckless pricing to gain market share most certainly will erode loss experience and eat away at capital. The hard market will then return.

We have seen evidence of this already in what many have called "the invisible hard market." Supply is decreasing and prices are starting to come back up; unfortunately, we just can't see it yet in our top lines. However, the time will come when underwriting income returns. In the meantime, we just have to take advantage of the opportunities that you can find by pursuing the right kinds of businesses in an economic downturn. It's up to you to find them and take advantage of your greatest asset these hospitality business owners are looking for--your expertise on their insurance.