25-06-2007
Smoking ban may not reduce business insurance premiums
The smoking ban effective from 1st July is unlikely to reduce business insurance premiums, according to Ken Watson of Marsh risk trading.
Mr Watson suggests: “I expect that the ban on smoking will do little to the costs of a club or licensed premise’s insurance cover. The fact that there are people smoking in your club or premises is not a rating issue for underwriters.
"It may well be argued that as there will not be anyone smoking inside the building it should make the potential for a damaging fire less than it currently is. However, under the vast majority of pub and club policies there is a stated expectation that all ashtrays and bins which have been used to collect the residue of cigarettes and cigars are properly emptied and disposed of at the end of each night."
Some pubs and restaurant owners may have been expecting their insurance premiums to go down after the ban is in full effect, due to the eliminated danger of fire from cigarettes. John Heaney, an underwriter from Hiscox, says that there may be some effect on premiums but nothing significant:
“For years it has been good practice to allow smoking in designated areas. Now the change could have a significant impact on pubs and clubs which see a lot of fire claims.”
There has also been speculation that any knowing contravention of the smoking ban by a business might lead to liability claims from customers or employees. Business owners and their staff should therefore be vigilant in enforcing the ban on their premises.