Canadian Underwriter

Hospitality’s hard market pre-dates the pandemic

March 15, 2022   by Jason Contant

Chef preparing pan-fried duck.

Print this page Share

Slip-and-fall claims, sewer backup and a hard market pre-dating COVID-19 are among the reasons you may find it difficult to find coverage for clients in the hospitality sector, such as restaurants and bars.

“A handful of insurance companies are still willing to write hospitality, but it’s really difficult, and prices have definitely gone up,” said Joyce Rajadurai, innovative & digital product practice leader for managing general agent April Canada. “Some Lloyd’s syndicates have withdrawn from the hospitality market.”

Availability and pricing of commercial coverage for restaurants, bars, hotels and event venues has concerned brokers for some time.

“Some Lloyd’s syndicates or carriers will not want to write insurance for a commercial building owner if that building has hospitality tenants in it,” she observed.

It’s been nearly a year since the Insurance Bureau of Canada (IBC) launched its Business Insurance Action Team. It aims to address withdrawal of some insurers from the hospitality market as well as increasing rates, said IBC vice president Jordan Brennan during the Insurance Brokers Association of Ontario annual convention in the fall of 2020.

By 2021, hospitality risks had been hard to place for two or three years, an underwriter with an MGA told Canadian Underwriter near the end of 2021. That’s partly because hospitality cover was underpriced and unprofitable even before the pandemic hit, the underwriter added.

For its part, April Canada typically looks at the ratio of alcohol to non-alcohol sales when it rates the liability portion of a restaurant.

“Right now, we are rating based on sales figures from prior to COVID,” said Rajadurai. “A lot of people would say that is unfair because obviously with COVID, there has been a decrease in sales. But we work with a market that audits all of our hospitality files and we will adjust to make sure that we are rating for the correct number of sales.”

With restaurants, sewer backup claims are common, Rajadurai added. One carrier has a $5,000 sublimit for sewer backup.

“If they were to offer higher limits for sewer backup, they would have to raise premiums, and it would not be feasible for a business owner to be able to pay,” she said.

April Canada writes coverage for restaurants and taverns as well as liability for banquet halls. The company used to write hotel business, but they tend to have high claims frequency – partly because of slip-and-falls, since there is a lot of foot traffic, said Rajadurai.

During the lockdown phase early in the pandemic, some restaurant clients were getting cheaper premiums along with reduced coverage and some exclusions on their operations, an underwriter for an MGA told Canadian Underwriter.

When lockdowns started to lift, those clients would ask the insurer to lift those exclusions only to find their insurer would either not continue to cover them or that their premiums rose significantly.


This article is excerpted from the Feb.-Mar. issue of Canadian Underwriter.

Feature photo courtesy of