Gavin Dollings assesses some of the risks in the diverse leisure sector

The leisure and tourism sector covers a wide range of activities from hotels, restaurants and pubs to cinemas, theatres, museums, gambling and sports clubs. Depending on how the industry is categorised, it is estimated to be worth between £75bn and £100bn to the UK economy and employs three million people in over 350,000 companies.

Some 60% of adults claim to take some form of sport or exercise and in 2004, we made 167 million visits to the cinema. By 2009, it is forecast that we will spend £26bn on our favourite pastime, eating out.

The size and diversity of the sector requires a thorough understanding of the risks involved and the market conditions.

Locations and construction of pubs and bars can vary considerably from rural, traditional pubs to city clubs with live entertainment and restaurant facilities.

Common liability hazards include slips, trips and falls, inappropriate actions by door staff, noise and assault risk to staff. All door supervisors must now have a Security Industry Authority licence. This is also a requirement for all new licences under the Licensing Act 2003.

Therefore, considerations regarding locations, construction and the provision of food are similar to those of restaurants.

Stadia, from local football club grounds to the new Wembley stadium, hold greater concentrations of people than most other types of premises. Effective crowd control and adequate maintenance of stairs, walkways, seating and electrical installations is crucial.

The security of spectators entering and leaving venues is also important. Stadia with a capacity greater than 10,000 spectators require a safety certificate under the Safety of Sports Grounds Act 1975. Smaller sports grounds with covered stands and a capacity greater than 500 spectators require a safety certificate under the Fire Safety and Safety of Places of Sport Act 1975.

Consideration must be given to stadia and arenas which host other events as the size of attendance, construction of temporary seating and stands, sound equipment rigs and the hiring of temporary staff will all have a bearing on the terms offered by insurers.

Another consideration is that stadia are sometimes located within flood plains because a large area of flat land is required for the playing area, stands and parking space.

The diversity of these types of risk means that each one requires individual consideration from both a property and casualty perspective.

For leisure centres, such as mall gyms and larger fitness centres, understanding all types of facilities on offer is vital in deciding whether to accept a risk and at what terms. Adequately trained and qualified staff, together with a proper maintenance programme, can lessen the risk of slips, trips and other injuries caused by negligence.

Composite panels
The conversion of country houses to health farms is a factor for consideration as the use of composite panels in large modern leisure centres can reduce the spread of fire from kitchen to sports halls.

From a business interruption perspective, reliance on particular facilities or activities for revenue can be an issue as even a relatively small material damage loss such as a kitchen fire or damage to the swimming pool can close the facility, resulting in a drop in bookings and revenue.

Hotels range from small guest houses to large country manors and international chains. Often these premises contain shops, leisure facilities, conference centres, restaurants and clubs.

Many hotels are converted from older buildings which may have wooden floors and interiors that increase the risk of serious fire and many are located in exposed or coastal areas. Given that there are often large sums insured involved, hotels present a considerable fire, storm and flood risk.

As hotels can accommodate large numbers of guests, there must be adequate evacuation procedures in place in the event of an emergency. The provision of correct storage for guests' personal effects is important as the Hotel Proprietors Act imposes strict liability on the hotelier for valuables deposited with them. As most hotels have a commercial kitchen which is the source of most fires, much of the risk and underwriting criteria associated with cooking ranges and restaurants will apply.

Common hazards such as slips and trips are due to poorly maintained or uneven surfaces therefore a proper maintenance programme and suitably trained personnel are key.

Finally, the speed and efficiency of an insurer's claims service must be a major consideration for all leisure risks as increasing competition in the sector means that it is easy for customers to find a suitable alternative.

The leisure sector undoubtedly presents a distinct set of underwriting challenges. Careful risk selection, adequate pricing and a detailed and realistic disaster recovery programme can help the business mitigate potential losses and is a positive sign that the client understands the hazards. IT

‘ Gavin Dollings is casualty manager at Allianz Cornhill Commercial.

Factors affecting leisure sector
Although high disposable incomes and low inflation and unemployment rates have created a robust and expanding leisure and tourism industry, the sector is sensitive to a number of factors, especially economic and competitive market conditions.

In 2001the stock market declined on the back of the ‘tech bubble', the decrease in tourism and business travel post 9/11 and the foot and mouth outbreak.

Changes in legislation and government policy, such as the Licensing Act 2003 and the ban on smoking in public places, could pose a further threat.

The number of over 60s is increasing every year, while the 18-34 year old market declines, presenting both challenges and opportunities for the sector.

Choosing from the restaurant menu
Although restaurants vary, there are a number of common characteristics:

  • Food type and origin will determine the preparation (such as use of knives) and cooking (such as use of fryers)
  • Number of staff working in a confined space surrounded by hot, cold and wet surfaces and sharp objects, means that the EL risks of burns, slips and cuts are ever present.
  • A fixed automatic fire extinguishing system can be an important consideration in whether to accept a risk and at what terms.
  • The location of the restaurant, as restaurants can be found anywhere from rural sites to major shopping malls and under office buildings, means that it is necessary to consider the flood and storm hazard, and the possibility of fire spreading to other premises.
  • Serving alcohol or hot food between 1pm and 5am requires an appropriate licence under the Licensing Act 2003 and compliance with the terms of the licence.