Article contributed by HUB International
As the new year approaches, taking action to proactively protect your business from varying risk exposures will help you reduce insurance costs, prevent unnecessary claims, protect your employees and bottom line. While some traditional hospitality industry risks, such as slip and falls, still require action, new and emerging risks are now taking center stage when it comes to liability exposure.
Advancements in technology could greatly assist with the ease of doing business, however new technology also comes with the dangers of heightened data privacy and liability concerns. The growing rate of active shooter incidents and other forms of terrorism also require intensified awareness on safety and security. In addition, with stories of sexual harassment in the workplace and the #MeToo movement dominating the news cycle for more than a year with no signs of stopping, employment practice liability concerns should be top of mind, not to mention new and existing legislation requiring employers to take action. The following are risk exposures on the horizon that the hospitality industry must be prepared for:
Technology – Balancing Risk & Reward:
Restaurants come in contact with personal financial information of customers on a daily basis, therefore the convenience and efficiencies of new technology must be balanced against the risks and costs of cyber-crimes and data breaches for this industry. Payment card fraud alone is expected to reach $32 billion by 20201, and the hospitality industry continues to be a lucrative target. In 2019, cyber liability coverage will continue to be a critical element to protect any hotel or restaurant.
Heightened Safety and Security Concerns:
Active shooter incidents are an unfortunate reality in today’s society. Hospitality venues such as restaurants, hotels, nightclubs etc. are sadly an open target. They’re designed to be friendly and welcoming, open to the public and without a lot of obvious security screening. The Pulse nightclub tragedy in 2016 made security a more top-of-mind consideration, with the point hammered home again with the Las Vegas massacre lodged from the Mandalay Bay hotel and casino, and most recently, the deadly shooting incident at the bar and grill in Thousand Oaks, California. It’s making insurance carriers ask a lot more questions and requires a lot more due diligence. Especially since these types of venues can host live events, they’re expected to take on more responsibility for safety plans that factor active shooter and terrorism contingencies into the mix. And while many mistakenly think coverage is built into their business liability coverage, it’s typically the bare minimum. In 2019, carriers are building out active shooter/terrorism coverage with business interruption, brand reputation protection and loss of income.
The #MeToo Movement Brings Heightened Awareness on Employment Practices Liability:
Over the past year, the #MeToo movement has only gained momentum and the hospitality industry hasn’t escaped unscathed from its impact. Research from a recent study2 surveying workers in the hospitality industry found that 89% experienced one or more incidents of sexual harassment in their working life. Of that 89%, over half said it had been by a member of the public and 22.7% said it was by a manager. In 2019, every organization in the hospitality industry should be taking a closer look at its employment practices, and harassment is just the tip of the iceberg. In addition to sexual harassment, the industry needs to start reviewing employment issues like failure to promote and wage and hour issues that will be scrutinized under their employment practices liability policies.
Delivering Increasing Auto Exposures
In 2019, more restaurants will take on delivery services to keep up with competitive pressures. Due to this, restaurants expanding into delivery services, will need to keep an eye on auto insurance rates and car repairs as well as the pros and cons of payrolled or contract drivers, the growing number of distracted drivers, etc. all of which will increase exposures and risks.
With 2019 right around the corner, you’ve surely started seeing or experiencing the impact of these hospitality trends, but be vigilant as they’re only going to deepen in the months ahead. It’s vital to work with a seasoned advisor in order to truly understand and manage the risk exposures and insurance needs for your organization.