Insuring Your Resort During COVID-19

PUBLISHED November 19, 2020 | updated November 19, 2020 05:00

What are the exclusions and inclusions in my insurance policy? A broadly asked question in the wake of the COVID-19 pandemic as resort owners and investors looked to their insurance policies for any possible compensation. Unfortunately, pandemics are almost always excluded from general insurance covers such as business interruption and let’s face it, COVID-19 took us all by surprise.  

The truth is that if insurance companies offered protection for lost profits from COVID-19 for hotels, then most of the insurance industry will go bankrupt. And not just in the Maldives.  

The top destinations Maldives cater to are only now slowly emerging from lockdowns and the air travel has been cut to a fraction of the norm. Social distancing rules isn’t much of a problem for the Maldives, but it is affecting the practicality of service of guesthouse on local islands and safari boats. 

There is no question that the effect on hotel trade and profitability is being hit hard worldwide, and even luxurious, top-notch hotels in the Maldives are especially badly affected. The sales recovery estimates for the next 12-24 months are not very strong, and it will take some time for revenues to recover to pre-pandemic levels.  

So, is there any way, you as a resort owner or an investor, can save some money on insurance and still protect your business during a pandemic? Probably yes.  

A resort in the Maldives, maybe with a turnover of more than USD 30mn or more, is expected to pay more than USD 70/100k a year for insurance coverage. This is almost always a combination of multiple covers. Fire, property, business interruption and third-party liability plans mostly account for the bulk of the premium.  

In terms of protection, the fire and property protection of the resort must be retained, this is a no brainer and should not be played around with but the risks to insurers have decreased considerably in certain areas with many hotels closed, with no guests and a few employees.  

Let us look at Business Interruption or the BI cover. For high-end hotels, the BI risk for insurers is normally confined to the first 12-18 months of any substantial damage. With a hotel closed and preparing to reopen later in the year, maybe with less staff and fewer rooms, the risk for insurers is now lower in the next 12-18 months. Hence, you can probably reduce the premium you pay for BI. 

Also think about your Third-Party Public Liability covers. Fewer guests mean lower risks. Compared to complete operations of 2019, steady market recovery operations of over one or two years also poses a lower risk. Lower risk should give you better insurance premiums.  

For those resorts renewing their insurance policies with Allied Insurance in 2020, we have accepted the reduction in risks, and renewal premiums on property insurance have been reduced due to lower BI and liability projections. Same on staff health insurance. Our clients are saving.  

Our recommendation is to call the insurance brokers or whoever has negotiated the insurance and ask that the policy rates be promptly checked to reflect COVID-19 ‘s drastic affects. Most policies will have a facility for premium adjustments that can be arranged in this period of renewal.  

Several major resort brands are having these conversations with Allied today. Many of its insurance brokers are doing the same on behalf of their clients.  

The insurance premiums you paid before borders were closed in the Maldives would reflect normal risk projections for resorts. These risks have decreased significantly and will probably remain low for the rest of the COVID-19 recovery period. Therefore, it is reasonable to expect your insurance company to offer you renewal terms that matches the new normal. 



Mr. Ahmed Shabiq – General Manager

Underwriting, Sales & Marketing Allied Insurance Company of the Maldives

Mr. Shabiq is a Senior Associate of Australian and New Zealand Institute of Insurance and Finance and an Associate of the Malaysian Insurance Institute and holds a Masters in Business Administration.

Equipped with a broad knowledge and operational skills in General Insurance Underwriting and Reinsurance, he has served in the company for over 18 years.


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