Author: Kaya Stanley, CEO of California Restaurant Mutual Benefit Corporation
The insurance market is on the cusp of a significant shift, moving from a prolonged soft market into a more challenging hard market. This change, evident in the recent surge in property and casualty and personal vehicle insurance rates, has broader implications for restaurant owners and insurance brokers. As the CEO of the California Restaurant Mutual Benefit Corporation, I want to share insights on navigating these changes and finding stability in an increasingly volatile market.
Understanding the Shift
The 17% rise in personal vehicle insurance rates in the first half of this year is just the tip of the iceberg. More concerning for our industry are the thinning coverage options in areas struck by climate change. Major insurers like Farmers Insurance and State Farm have reduced their policy renewals in high-risk zones like Florida and California, reacting to the heightened risk of hurricanes and wildfires.
Climate change exacerbates the situation. The rising frequency of wildfires, floods, and other natural disasters strains insurers’ reserves. The escalating building materials and labor costs further inflate claims payouts, pushing premiums up. This situation is particularly troubling for restaurants, many of which are in areas increasingly deemed high-risk by insurers.
The broader economic landscape also plays a significant role in the cyclical insurance market. Signs like high Treasury Bond Yields, reminiscent of The Great Depression era, indicate a shift towards a harder market, where insurers, facing lower returns on investments, will likely raise rates to maintain profitability or even stop offering coverage in certain states.
A Proactive Approach for Brokers and Owners
In a hard market, premiums increase, and underwriting criteria tighten. For restaurant owners, this could mean facing higher insurance costs, more stringent policy terms, or difficulty finding coverage. Brokers need help securing adequate client coverage amidst shrinking capacity and rising costs.
So, what can restaurant owners and brokers do in this shifting market? It’s about being proactive, and the California Restaurant Mutual Benefit Corporation (CRMBC) is here to guide that approach. We understand that managing insurance costs effectively, reducing risk, and maintaining compliance is paramount for restaurant owners, especially in an industry characterized by high employee turnover and significant operational risks.
For brokers, particularly those focusing on the restaurant sector in California, providing cost-effective, reliable workers’ compensation solutions is key. At CRMBC, we specialize in tailoring these solutions to meet the unique demands of the restaurant industry. Our industry-centric approach, collective risk management strategies, and data-driven decision-making enable us to offer more effective and enduring solutions than conventional insurance options.
In market volatility, self-insurance and self-insurance groups emerge as stable alternatives. They offer protection against the unpredictable nature of the market, providing consistent and reliable workers’ compensation options. This approach, coupled with CRMBC’s focus on tailored, industry-specific solutions, offers restaurant owners and brokers a haven.
Addressing the Broader Challenges
CRMBC is actively monitoring the initiatives by California Insurance Commissioner Ricardo Lara and Governor Gavin Newsom, which aim to improve insurance choices and tackle climate-driven insurance issues. These actions, focusing on the sustainability of the insurance market, are crucial, and CRMBC is committed to aligning our strategies with these broader efforts to ensure the resilience and stability of the restaurant industry.
Through our approach, which blends financial advantages with enhanced control and transparency, CRMBC not only provides cost benefits but also ensures that our services are closely aligned with the needs of our members, offering stability, trust, and a sense of control amidst fluctuating insurance markets. This is how we contribute to our clients’ improved business resilience and peace of mind in the restaurant industry.
The insurance landscape is evolving rapidly, influenced by climate change, economic factors, and market cycles. For restaurant owners and brokers, understanding and preparing for these dynamics is essential.
Staying informed, proactive, and adaptable is critical to navigating these changes. Let’s work together to find solutions that ensure the sustainability and success of our businesses in this new insurance era.
Kaya Stanley is an attorney, published author, business owner, and highly sought-after strategic turnaround expert. Ms. Stanley serves as CEO and Chairman of the Board for CRMBC, the largest restaurant workers’ compensation self-insured group in California, and she is the Licensee for TEDxReno, an independently organized TEDx Event.
Throughout her 22 years of practicing law, Ms. Stanley has served as outside counsel for Wal-Mart and Home Depot. She was voted one of the country’s “Top 25 OZ Attorneys” by Opportunity Zone Magazine and published a best-selling book called “The Employer’s Guide to Obamacare.” Before that, she earned her master’s degree in social work and public policy, after which she worked with at-risk girls in Detroit and lobbied for women and families.
