Q&A: Hiscox on the new risks brought on by an evolving leisure sector

Leisure businesses are evolving to meet changing customer expectations, with the risks they face evolving in tandem. Recent research from Hiscox has explored how businesses are adapting, as well as three emerging areas of risk across participation, diversification and customer data.

Ahead of the upcoming ’New Leisure. New Risks’ webinar in association with Hiscox, Insurance Times spoke to panellist Simon Ratcliff about the changing nature of risk in the leisure sector. 

1. How are changing customer expectations reshaping the leisure sector and the types of experiences businesses are offering?

People want more from their leisure time. They want more variety, more ways to take part and experiences that give them a reason to stay longer or come back.

Our research found that 57% of consumers have tried a new or different leisure activity in the past year, while 59% believe there’s more variety available than there was five years ago.

Businesses are responding to this. Museums are becoming more interactive, breweries are adding tours and venues are combining activities with food, drink and events.

That’s really the idea behind ’new leisure’ – familiar businesses evolving into something broader and sometimes harder to categorise.

And that matters for brokers, because leisure businesses aren’t what they used to be. And neither are the risks.

2. How is the changing role of our towns and high streets contributing to the emergence of new types of leisure business and activity?

The lines between leisure, hospitality and other types of business are becoming increasingly blurred. A venue might now combine several different activities, services and customer experiences under one roof.

That’s part of a broader shift towards more experience-led and hybrid leisure formats. We’re seeing businesses add cafés, play areas, tours, events and new activities as they respond to what customers want.

For brokers, the interesting question isn’t necessarily “what category does this business sit in?”. It’s “what does this business actually do today?”.

That increasingly tells you much more about the risk.

3. We’re seeing leisure become much more participatory and interactive. What new or different insurance risks does that create?

When customers move from watching to actively taking part, the nature of the exposure changes. Two thirds of consumers are more interested in participatory leisure than they were five years ago and 27% of leisure businesses say they’ve temporarily closed or lost income because of risky customer behaviour.

So it isn’t just about the obvious injury risk. A damaged piece of equipment or attraction could take part of a venue out of action and lead to cancelled bookings and lost income while it’s being repaired.

For brokers, that means looking beyond the activity itself and understanding things like the equipment the business depends on, how customers participate and what happens to the wider operation if something goes wrong.

4. What should brokers be looking out for when clients diversify into new activities or more unusual forms of leisure?

The biggest thing is small changes adding up over time. A leisure business rarely becomes something completely different overnight. It adds a café, starts running events, introduces a new attraction or opens up another part of the site.

Individually, those changes can feel relatively minor, but eventually you can have a very different business from the one first insured.

Our research found that 75% of leisure operators have added a new service or plan to, yet 33% of those that added one in the past year haven’t checked whether their insurance covers it.

So one of the most useful questions a broker can ask is this – ”Is the business on the renewal form still the one operating on site today?”.

That regular conversation about what has changed can help surface activities, services or exposures that might otherwise be easy to overlook.

5. As more of the leisure customer journey moves online, what should businesses and brokers be thinking about when it comes to customer data?

Bookings, memberships, payments and customer communications increasingly happen digitally, which means leisure businesses are holding more customer information across different platforms and systems.

Our research found that 79% of leisure operators collect customer data digitally, yet 19% of those businesses don’t consider themselves to be data controllers.

The issue isn’t only whether a business collects data. It’s whether it understands what it holds, where that information sits, who can access it and how it’s protected.

Those are increasingly useful questions for brokers to bring into client conversations as leisure businesses become more digital.