By Kim Gore

As if the hospitality industry wasn’t already dealing with enough worrisome exposures for high cost claims – think active shooter tragedies, cyber-theft and liabilities for serving liquor. Now it needs to prepare for the pressures in the aftermath of the coronavirus pandemic.

Pressure has been building since 2019 on all casualty lines, auto and general liability insurance products. It all directly impacts the commercial umbrella insurance that’s the extra layer of protection against the outsized claims that have plagued the industry. The result? Prices are going up. The limits are lower. Coverage is narrower. It’s also becoming more difficult to find, in terms of pricing and capacity.

If rates have been trending up by 20% in the underlying policies, the high dollar jury awards for the high-profile hospitality industry claims covered by umbrella insurance are helping to drive those rates up by as much as 40%. When you add in the unknowns of the pandemic, they may go even higher.

After months of physical quarantine, massive business closures and job losses, and learning to live with masks (or not) in an already polarized environment, public tensions are at dangerously high levels. Conflicts have escalated, some ending in violence such as the shooting of four employees of an Oklahoma City McDonald’s by a customer who returned to the restaurant with a gun after being asked to leave the dining room which was shuttered due to coronavirus restrictions.

As the industry moves to reopen, it’s not just safeguards for the public health that must be put into place and strictly followed, but safeguards against the behaviors that could pose a danger to other customers, employees, and facilities, as well.

Part of the challenge ahead is ensuring re-opening is done in a way that heads off problems before they happen. That means pandemic-driven changes should be easy for customers to adjust to, and communicated adequately. For example:

  • Internal and external space and flow should be carefully managed in the interests of social distancing.
  • Signage should clearly spell out particular rules or information for patrons – from ingress and egress to maximum capacity requirements to hours of business.
  • The transaction process should be clear, easy for employees and customers to understand and use. It’s worth noting that on a global basis, the pandemic is upending cash economies and mobile money services are surging. In the U.S., use since March 1 has risen by 11%, with PayPal downloads alone soaring 32.3%. Hospitality management should investigate if this is a trend to hop on.
  • An enterprise resource planning (ERP) system may be one of the more valuable tools available to managers for effectively managing an operation’s disparate moving parts. These should be in place and up to date, and staff should be familiar with their use.

Despite preventive measures, the reality is that customer behaviors may well be far different than in the pre-pandemic days. Every organization should augment its physical security measures with guides and training for staff on threat reporting, conflict management, violence management and de-escalation.

Verbal de-escalation training, for example, can equip staff to effectively deal with the verbal abuse that some customers have meted out when asked to observe social distancing etiquette. It’s important for workers to understand that what they are communicating (verbally and non-verbally) drives the de-escalation.

Hospitality’s exposures during the pandemic are only going to aggravate its already worrisome risk environment. It makes stepped-up risk management for workplace violence and security more important than ever.

HUB International’s team of brokers is available to help your hospitality organization understand and manage its risk and insurance concerns.

Get the latest information, guidance and resources on Coronavirus (COVID-19) to help you protect what matters most on our Coronavirus Resource Center.