A number of restaurant and hospitality business owners have needed to make difficult decisions over the last few months regarding their operations, team and future.
The situation surrounding the COVID-19 Pandemic has created a great deal of challenge, however, it’s also driving an innovation boom as businesses quickly work to adapt to the ongoing pandemic situation—and ultimately prepare for a post-pandemic future.
In the last few weeks, I’ve encountered many stories about owners finding their own ways to adapt to the present challenges their facing. Here are a few examples:
- Restaurant groups with fresh meats, fruits and vegetables began to offer these items they purchase from wholesalers directly to the customer in a market type environment. This move provided some relief to the grocery stores and allowed the restaurant owners to not lose valuable goods to spoilage. This also provided some semblance of ongoing business to the restaurants employees, and offered customers a chance to support their restaurant through this challenging time.
- Restaurants evolved their service to rely exclusively on curbside, delivery and pick up for customers. This has become a very successful opportunity that wasn’t widely popular in the restaurant space previously. Ultimately, restaurant owners will likely continue to offer these services beyond the pandemic as it’s a new, viable revenue source—that doesn’t require table turns. Restaurants that didn’t offer delivery previously are either utilizing third-party or, in many cases, internal resources.
- Some limited service restaurants and coffee shops have used this time to revamp their websites and online shops to help customers access their products while developing a new revenue stream that will continue to grow beyond the pandemic.
In the end, does any of this impact insurance? The costs of insurance? How we evaluate risk?
The short answer is yes, and since this situation has driven innovation among restaurants, it will also drive innovation surrounding how the insurance products and services are designed and delivered as well.
As many have learned, business income and extra expense coverage has been put under a microscope. This is a sensitive area. All carriers and policies may have different forms, so it’s hard to give a clear picture of what the opportunity is from here forward.
So what could the potential outcomes be? Here are a few educated guesses (and mind you, these could change as the pandemic situation evolves):
- Standalone Business Income and Extra Expense coverage form that affords coverage for a Pandemic and forced closure due to a civil authority (removing language requiring direct physical damage) could be developed by carriers to address current concerns.
- A fund much like Terrorism Risk Insurance Act (TRIA) is being discussed calling it Pandemic Relief Insurance Act (PRIA) that would be a tax basically added to insurance policies to fund catastrophic pandemic events up to a certain dollar amount.
There’s a lot of discussion right now about what’s going to happen next. While it’s hard to say for certain, we encourage all of our clients to be prepared and proactive. If you’re a business owner, make sure your operations, policies and coverage are in order now. Not sure they are? If you have any questions about these topics as it pertains to this article, please don’t hesitate to contact me.
