HOSPITALITY INSURANCE
Key Trends & Insights
Key Takeaways
Canada's Hospitality Insurance market is softening, but high-liquor-revenue establishments still face placement challenges.
Liquor Liability insurance is not a onesize-fits-all policy and must be customized to each business's unique circumstances, considering local regulations, pricing, and risk exposure to ensure adequate protection.
Social media marketing can significantly impact a business's insurability.
Liquor sales exceeding 50% of revenue make coverage harder to obtain, reinforcing the need for diversified income streams.
Brokers should proactively review applications and advise clients on risk management strategies to improve insurability.
Canada’s Hospitality Insurance market is softening with insurers competing for lowerliquor-revenue Hospitality clients. However, high-risk venues like nightclubs and live music establishments still face challenges.
Whether your clients are operating a bar in a major city or hosting events in a rural town, it is crucial to understand the local Liquor Liability framework to ensure that your clients remain protected.
Emerging Trends
Social media – whether Facebook, Instagram, TikTok or another platform, a business’ online presence is playing a growing role in Liquor Liability underwriting. Bars and restaurants that actively promote drink specials, late-night events, or high-risk activities may face higher premiums and fewer coverage options. Underwriters routinely assess an establishment’s social media and websites to ensure that their public promotions align with their insurance applications, as discrepancies could jeopardize coverage.
Recreational entertainment – such as axe throwing, virtual reality arcades, and golf simulators, combine alcohol with physical activities, resulting in a higher risk of injury and greater exposure to liability.
BYOB (Bring Your Own Bottle) – allows patrons to bring their own beer, wine, or liquor to a restaurant. This may involve paying a corkage fee to the establishment. While this practice can attract more customers, it may also result in underreported alcohol revenue and increased liability for the restaurant.
Rotational themed events – venues are increasingly aiming to provide unique, immersive experiences for their customers. However, promoting an "unforgettable night" can lead to higher liability risks.
Mobile bars, including p cocktail trucks – presen difficulties due to their la locations.
Extended happy hours, l and high liquor-to-food to higher risks and unde
Hibachi-style restauran cooking venues – face h Liability concerns, partic hazards and slip-and-fal
Tips for Brokers Agents
Here are some tips that can make brokers and agents more successful in attracting new Hospitality business and keeping existing clients.
#1 Understand provincial and local liquor laws.
Liquor regulations in Canada vary by province and municipality, impacting licensing, liability exposure, and insurance requirements. Ensure clients consult their provincial alcohol regulatory authority to stay compliant with evolving rules.
#2 Pre-underwrite applications.
Identify high-risk factors—such as drink specials, late hours, and a large percentage of college clientele before submitting applications to insurance carriers. Help clients assess if the risks justify the potentially higher insurance costs. Update applications and loss runs with current data.
#3 Audit social media.
Ensure your client's social media posts align with their business plan and insurance coverage. Advise them to delete any content that may raise concerns. Highlighting food offerings while downplaying alcohol promotions can help secure and maintain coverage.
#4 Establish and regularly review risk management policies.
This may include conducting regular social media audits and implementing measures to prevent intoxicated customers from driving, such as promoting ride-sharing services or encouraging the use of designated drivers. Additionally, consider reviewing business hours and menu options to enhance underwriting prospects.
#5 Meet with clients on-site.
Conduct venue tours to assess potential liability risks and discuss risk control strategies. For example, encourage clients to expand food sales to reduce the liquor-to-food revenue ratio, which may improve their attractiveness to insurance carriers.
#6 Manage client expectations.
Understand that a client's needs and beliefs may not align with current market conditions. Ask about their business model so you can effectively advocate for their coverage needs.
#7 Emphasize operator experience.
While newer ventures can be more challenging to insure, establishing that a seasoned hospitality business owner has a good track record with few claims can make a client more appealing to insurance carriers.
#8 Partner with an experienced MGA underwriter.
Navigating the Hospitality Insurance market requires specialized expertise. Work with a partner familiar with local liquor laws to secure tailored coverage and navigate regulations. They can provide access to various markets, structure comprehensive insurance solutions, and offer risk management strategies for challenging placements.
Despite some challenges, opportunities in the Hospitality sector are abundant.
By networking, positioning yourself as a subject matter expert, and staying current through continuing education, you can consistently uncover new business prospects.
No matter the risk size or complexity, Burns & Wilcox is here to help leveraging deep market expertise and strong carrier relationships to find solutions across North America
Contributor
Lisa Campbell
Associate Manager, Halifax
Atlantic Division
Burns & Wilcox
Halifax, NS
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This commentary is intended to provide a general overview of the issues contained herein and is not intended, nor should it be construed, to provide legal or regulatory advice or guidance. If you have questions or issues of a specific nature, you should consult with your own risk, legal, and compliance teams.