The Battle for Survival and Managing Your Risk

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While Vaccine Remains Best Hope to Restore Dining, Aggressive Risk Management is Needed to Build Resilience.

by Hub International

Holistic risk management strategies with an emphasis on pandemic and emergency planning will take on huge importance in 2021. Insurance costs and availability haven’t been this pressured since the 2001-2004 hard market, where we saw premiums jump and availability shrink. The best way to control insurance costs is to avoid losses in the first place.

As restaurants pivot, adequate protection against risk is a big concern. With generally less infrastructure, the restaurant industry has the potential to be nimble in devising options to survive these circumstances.

This was demonstrated in the immediate wake of the pandemic quarantine period. Restaurants pivoted to delivery and take-out, and kept up the services to stay open. Others have reinvented their business models. The trend toward “ghost” kitchens was hot before the pandemic and has accelerated. These can be urban warehouses containing multiple small kitchens leased by a restaurant or a restaurant’s subcontractor for delivery only.

Such changes have kept many restaurant doors open – for a while, at least. Chances are that delivery services were easily accommodated by third party services like Grub Hub and Uber Eats, which delivered $10.2 billion in carryout meals in 2018.

Those that have proceeded with their own drivers should work with their insurance brokers to offset such risks as food safety, customer privacy and data security. They should also be aware of increases in auto coverage in 2021 that might make third party delivery services more attractive.

Another potential risk restaurant operators face in 2021 is a surge in outsized claims being tracked back to on-the-job contagion, pushing financially stretched health insurers to subrogate them back to workers’ compensation carriers. That could trigger double digit rate increases in workers’ compensation.

Restaurants that have opened to dine-in at any capacity should also conduct risk assessments to audit their coronavirus safety measures, to ensure they meet or exceed Center for Disease Control guidelines. Restaurants should contact their brokers for this type of service and additional resources.

Succeeding through 2021’s challenges
The industry that emerges in 2021 and beyond from the disruption of the pandemic will be not just slimmer, but smarter, demonstrating the resiliency it takes to get through to the other side of uncertain times. It will be a time when meeting health and safety concerns will be paramount – for employees as well as for customers and guests. The industry’s challenge will be to innovate around it all. An environment like this creates opportunities, but also risks. Make sure your coverage is right-sized and potentially high premium rates controlled.

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