INSURANCE RATES ARE PROVING THE HARD COST OF CLIMATE CHANGE CONTINUED...
SPECIAL REPORT
do not buy the right coverage, or, God forbid, they do not have any coverage at all,” said Next’s Fuks- Leichtag. “I would advise operators to go through a company that can really evaluate the risk for a restau- rant. ‘Am I covered for tornados, am I covered for a flood?’” DeLorenzo believes operators will soon find relief through tech- nology, though he acknowledges having a stake in that possibility. He’s launched a product that es- sentially monitors all pockets of an activity within a restaurant via camera. With proof of what actual- ly happens, spurious liability claims won’t have a shot, and that helps BOP rates. The surveillance can also weed out bogus weather-relat- ed claims that tap an insurer’s pool, like claiming a walk-in’s contents have spoiled when a visual record shows no loss of power or physical damage. All of the insurance executives stressed the importance of having a relationship with an insurance broker or carrier’s agent. “I’d rath- er deal with Bill, who’s known me for 20 years and can get me on the phone on a Sunday if he has a fire,” said DeLorenzo. “I know him, and he knows me.”
That intensified look also ex- tends to operations. “If it’s a place that has $100 bottles of wine, you look at it differently than you do a place where employees are lugging up buckets of Buds from the base- ment,” he said. But there are ways of offsetting Mother Nature’s impact, he and other insurance executives con- tend. “When things become so cost prohibitive that you have to look at things differently, you find the solu- tions,” Cassetta said. For one thing, they advise restau- rateurs to look beyond a BOP. Be- cause the policies are a combination product, there’s not a direct correla- tion between the risk of weather damage and what operators pay to cover their properties from that sort of setback. A fight between custom- ers over a hotly contested game on the bar TV can significantly hike what they pay to ensure storm dam- age can be repaired. Operators are better off dealing with policies that are focused, ide- ally from brokers that specialize in policies for the restaurant business. “Are you going to go to a brain sur- geon to have work done on your heart?” Cassetta asked. “We see many restaurants who
“If they don’t know you, it can be a tougher sell,” agreed Cassetta. Even if they’re unacquaint- ed with you, they may know your brand, which affords chains an ad- vantage in insurance hunting and claim resolution. “If I call ‘em up and say ‘It’s a Jimmy John’s, they know exactly what that place is like if they’ve insured a Jimmy John’s before,” Cassetta explained. NOT A ROSY OUTLOOK Without regulatory action, opera- tors are unlikely to see their proper- ty and casualty rates reset, in large part because of weather’s unpre- dictability and what meteorologists confirm is a real increase in what were regarded as once-a-centu- ry events. “It’s happening, and it’s real,” said Next’s Fuks-Leichtag. About half the claims (48%) filed by restaurant owners from Decem- ber through February deal with damage from Mother Nature, ac- cording to Next. “What’s going on with the weath- er is having a huge effect on what’s going on with insurance rates, and it’s going to have a huge effect on availability,” DeLorenzo said. “It’s going to get tougher and tougher and tougher.”
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RESTAURANT BUSINESS JANUARY 2025
ILLUSTRATION BY DIMITRI MORSON/MIDJOURNEY
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