With the darkest days of the pandemic behind us, it’s amazing to see many restaurants and live music venues back to full capacity.
But it wasn’t that long ago when many of these same businesses had to close their doors in the interests of public safety. Health measures aimed at controlling the spread of COVID-19 were especially hard on Ontario’s hospitality industry, which was subject to more days under government restrictions than any other province.
It wasn’t only the pandemic that created challenges for the hospitality sector. Beginning in 2019, Canada’s commercial insurance market entered a period where rising claims costs outstripped premiums, leading many insurers to recalibrate and pull back capacity.
Due to the limited market for specialty products like Liquor Liability coverage – which provides protection for alcohol-related incidents and liabilities for small businesses that serve and sell alcohol for a profit – the hospitality industry felt the brunt of both the pandemic and a challenging insurance market harder than other sectors.
Across Canada, bar and restaurant owners are increasingly being dragged into lawsuits by patrons or third parties who are injured due to alcohol-related events. Some insurance providers have pulled out of the hospitality segment because of rising claims involving establishments that have high liquor-consumption revenues.
In November 2020, in an effort to support Ontario’s hospitality sector, Insurance Bureau of Canada (IBC) launched a unique program to help some of the hardest hit businesses. With support from a number of IBC member insurers, the Business Insurance Action Team (BIAT) worked with small restaurants and bars, as well as not-for-profit community groups, to help them access affordable insurance.
Working directly with brokers and business owners, a risk manager and panel of insurers assessed and reviewed eligible business applications to provide loss prevention recommendations. In every case, coverage was either placed in the regular market or BIAT insurers provided a quote.
The BIAT program came to a close in summer 2022 as pandemic restrictions ended and additional capacity returned to the market. However, IBC’s risk manager continued to work with several businesses that had applied for assistance before the program ended.
In total, BIAT assisted 125 Ontario businesses over its approximately two years in operation. The last policy under the BIAT program was placed in the regular market effective June 4, 2023.
BIAT assisted a wide range of businesses including a number of small pubs and restaurants, a veterans’ association, a not-for-profit social club, an amusement park operation, and event and music halls.
Today, the Canadian insurance marketplace has entered a state of growing stability for the commercial policies that are important financial tools for the hospitality industry. As the economy rebounds, new capacity is driving competition, and hospitality businesses now have the advantage of shopping around to find the best price. There are still lingering risk issues that will continue to put pressure on premiums – such as alcohol liability, rising legal costs, and the impact inflation is having on claims costs.
Insurers are here to help businesses obtain the coverage they need. Businesses that prioritize proactive risk management strategies will have more insurance options.
IBC’s risk manager remains available to any small business wanting assistance in navigating the insurance process. This free service can be accessed by phoning 1-844-227-5422 or emailing RiskManager@ibc.ca.