How to Prepare for Pub and Restaurant Insurance in a hard market
Increasing premiums, tightening terms and conditions in the Wordings, higher excesses and a limited number of insurers available, on top of what has already been an incredibly challenging period for hospitality industry – how hard is it now to find the right insurance? For something that you may have previously auto renewed without thinking, it has most certainly been under the spotlight previous 12 months. So just how do you make sure you have the right insurance in place now and going forward, in what is a hard market?
What is a hard market?
Its probably not a term you would have known this time last year, but has no doubt been echoed by brokers across the land repeatedly for the last few months.
In a soft market, you are likely to see; low premiums, Broad Cover and Higher limits
In a hard market you are likely to see; High premiums ,Reduced Appetite and higher exclusions with limited cover.
Why is it a hard market for pub and restaurant insurance?
Much has been documented about insurance issues arising from the virus. With many restaurants and pubs closed due to Government guidelines, many have sought claims under their business interruption policies. Whist, in the UK and across the world , the validity of the claims and the amount of losses are still ongoing, the damage is already severe. It is a market under pressure, and has been for some time. In many areas, the impact of the pandemic merely compounded what was an exceptionally tight space to begin with.
What can be done to get the best insurance available for pubs and restaurants?
The hospitality industry was one of the first industries affected when Covid 19, and will no doubt be one of the longest suffering. The large scale insurance losses and following increase of premiums will add further strain to the industry. Here are some quick tips on how to get the best from your insurance.
Give Time, Be rewarded
Spend some time. Spend some time finding the right insurance broker for your business. Research and see who fits well with you. Then spend time and work with them. Information is king. In a hard market, be prepared for everything to be picked apart more. It may feel like a frustrating experience but it is essential. It may be tempting to find a quick quote and buy online policy, but in a hard market this may not be the best for your business. Insurers are adding exclusions and restricting cover so interaction with a broker is key to understanding.
Accuracy is key
Assess your Turnover. This is vital to get right and keep your broker updated once policy has been placed. Whilst turnover expectations may well be lower now due to closures and limited trading – this is important to not overpay on insurance, as this is a key factor in pricing.
However, once trading picks up again, it is then of course vial to give your broker up to date figures. In a world where claims are increasingly being put under spotlight, having accurate figures for turnover throughout the policy period is paramount.
Flexibility in how you approach your insurance requirements could be key. If you are willing to take on more risk than previously before, let your broker know what areas you have room for manoeuvre on. Work with your broker to break down the ratings and cost for every element of the policy. You may find you are paying a higher rate for something less important to you. Don’t just look at overall premium, ask for breakdowns and get granular with it.
If you are a multi site operator now may be the most appropriate time to consolidate your business. Build a single insurance policy that incorporates all sites and benefit from economies of scale. Have you considered insuring on a first loss basis? This may be the best time to explore your options
Should I be weary of new markets?
As with every hard market, certain insurers pull capacity completely, others have it reduced, and new contenders come in, and see opportunity. This is the way of insurance and not something immediately to scorn.
In many ways, emerging markets could be a very reasonable solution. With restaurant and pub insurance, niche and specialist MGA’s are proving very competitive with rates and leaving many of the traditional larger markets behind. When discussing with your broker be sure they have access to these markets as they may be a great solution.
It’s no doubt challenging times for all involved. The key to making the most of your insurance is to come prepared, come early, and be demanding from your broker! Be prepared to answer more in depth questions than ever before. Work with your broker to consider and work through all options up front – well ahead of key renewal dates – as there will be more that your broker can do in terms of programme design, policy coverage, structure, and choice of markets – which ultimately will have a bearing on how much premium you will end up paying.