Why is my entertainment center property premium increasing?

2020 was a hard year for numerous reasons beyond the obvious. We all dealt with business closures, insurance rate increases, sales decreases, government closures, capacity restrictions, personal health issues, and the overall economic fallout from the pandemic. But what does this mean for entertainment centers, including bowling, tennis, FEC, and escape rooms, in 2021?

First, let’s dive into a little industry background. The insurance industry cycles between hard and soft markets in terms of carriers, pricing, and terms.
• Soft Market: a high number of carriers want your business. Terms and conditions are relatively loose, which translates to cheaper pricing due to a high supply of carriers competing to give you better quotes, as long as your loss/claims history is good.
• Hard Market: a high demand for insurance coverage, but with fewer carriers quoting. Premiums increase, terms and conditions are tighter, and there are a limited number of policies issued.
We are in a hard market about to get harder, especially when it comes to property insurance. Why? Just to name a few reasons…
Storms ravaged the property insurance industry throughout 2020
There were 22 weather or climate disaster events in 2020 with losses exceeding $1 billion each that affected the United States. The 1980-2020 annual average is 7.0 events (CPI-adjusted), while the annual average for the most recent 5 years alone is 16.2 events (CPI-adjusted). In simple terms, there has been a 37% increase on average in the number of weather-related disaster events.

Beyond the billion-dollar losses, hundreds of deaths, and significant economic effects on areas impacted by weather disasters, there was a high frequency of 2020 storms and other events:
• 30 named storms (top winds of 39 mph or greater), of which 13 became hurricanes (top winds of 74 mph or greater), including six major hurricanes (top winds of 111 mph or greater)
• 1,053 preliminary tornado reports
• 57,000 reported wildfires, up 12.9% in 2019. Wildfires hit especially hard in California, Washington, Oregon, and Colorado


This does not include all the flood damage as well as the metaphorical storms of civil unrest destroying business after business. You get the picture: major property damage losses for carriers.
Industry news impacted entertainment insurance
In early 2021, one of the largest bowling and family entertainment carriers in the market announced it would exit the business in April 2021 due to losses including fires, hurricanes, and a roof collapse. These losses, coupled with decreased sales figures brought on by the pandemic that drove lower premiums, were too much for the insurance company to handle.

Another large sports facility carrier was recently hit with a major shooting incident. Their losses could extend into the millions. One Sports and Entertainment Program Administrator closed shop, leaving clients high and dry, while another lost their insurance carrier support.

The marketplace is constricting quickly. Underwriters are taught early that frequency breeds severity. In other words, if something is happening often, it is only a matter of time before a big loss hits the books.
What can be done?
As people fight to get back to “normal” and sales figures return, some may think the industry can expect overall premium relief. But as we noted above, we are facing headwinds some of us have never faced before. You need to partner with someone who knows the industry and the players in terms of carriers in the industry space. More than that, you need a partner who is driven by ethics, results, and relationships built over 10 years to drive positive results in terms of total cost of risk.

A couple of simple solutions can help your cause:
• Provide detailed information in terms of building valuations. Do not underestimate your values to drive the premium results you are looking for. Carriers are now starting to look at limitations in terms of blanket coverage limits versus individual building values.
• Understand COPE: construction, occupancy, protection, exposure. This includes details such as type of construction materials used, number of stories, fire protection, and more. Secondary COPE characteristics relate to the building’s susceptibility to damage from windstorms or seismic activity.
• Provide detailed information on the age of the roof and updates to electrical, plumbing, and HVAC.
• Do not take for granted the value of video storage, central station alarms, and other fire and burglary protection. All of these drive premium credits.
Underwriters today are model-driven, so quality inputs, including credit modifiers, drive the premium up or down. This is how we can help deliver the best results possible in a tough marketplace.

The ESP team is committed to co-elevation. This only happens when our goals align with your, as we are committed to helping you grow and protect your business. As always, we thank all our clients who drive us daily!

Get in touch with Team ESP. Go Ahead, We’ve Got You Covered





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