Author: Kaya Stanley, CEO of California Restaurant Mutual Benefit Corporation
As the California restaurant insurance landscape evolves, brokers face the critical task of guiding their clients through rising costs, regulatory changes, and emerging risks. Here, we look at four trends that are driving this evolution and suggest ways brokers can help their restaurant owner clients effectively navigate this dynamic environment.1. Rising Costs and Market Shifts
The transition from a soft to a hard insurance market, marked by rising premiums and reduced coverage options, is particularly pronounced in regions like California, where climate change has intensified the risk of wildfires and other weather-related disasters. Insurers are overhauling their risk assessment models to account for these escalating threats, prompting a strategic recalibration of policies to minimize financial exposure. Consequently, restaurants face heightened operational costs as major insurers revise their strategies to navigate the growing peril of natural disasters more effectively.Strategies for brokers:
- Monitor Market Trends and Carrier Strategies: By staying informed through resources like the National Restaurant Association, brokers can gain industry-specific insights that aid in strategic decision-making and client advocacy.
- Explore Self-Insurance Options: Look at alternatives offered by companies such as CRMBC, which mitigate costs through customized risk management strategies.
- Nurture Carrier Relationships: Developing solid connections with carriers committed to the California market empowers brokers to advocate effectively for their clients, leveraging their industry knowledge and negotiation prowess
2. Regulatory Landscape and Compliance
California’s regulatory environment is in flux, with new reforms and wildfire mitigation requirements impacting insurance policies. Additionally, legislative efforts to adapt to these changing risk landscapes have led to new reforms, such as Proposition 103’s overhaul, to ensure insurance remains available and affordable for businesses, including restaurants, across the state. Such regulatory shifts underscore the state’s proactive stance in safeguarding its economic backbone, particularly the hospitality sector, by aligning insurance practices with the realities of climate change and market demands.Strategies for brokers:
- Become a Regulatory Expert: Stay ahead of legislative changes by partnering with organizations like the California Workers’ Compensation Institute.
- Proactive Policy Review: Conduct regular policy reviews for compliance, leveraging your expertise to address potential coverage gaps.
- Transparent Communication: Clearly explain regulatory impacts on coverage and premiums to your clients, ensuring they understand their options.
3. Emerging Risks and Coverage Gaps
Beyond traditional exposures, restaurants now face cyber risks and health-related liabilities exacerbated by the pandemic. In particular, there is an increased reliance on digital operations for ordering, delivery, and payment processes. This shift has opened new avenues for cyberattacks, data breaches, and other digital security risks. Similarly, health-related liabilities have become more pronounced as restaurants navigate the complexities of public health guidelines, potential exposure risks to patrons and staff, and the broader implications for workplace safety and workers’ compensation insurance.Strategies for brokers:
- Identify Evolving Threats: Keep abreast of new risks by following industry trends and cybersecurity developments.
- Recommend Specialized Endorsements: Cyber liability endorsements and mental health coverage options can provide crucial protection for modern risks.
- Customize Coverage: Move beyond generic solutions and tailor coverage based on comprehensive risk assessments.
4. Customized Solutions and Strengthening Client Relationships
Understanding each client’s unique needs allows brokers to tailor coverage and become trusted advisors. By deeply understanding each client’s business model, operational risks, and industry-specific challenges, brokers can customize insurance solutions that precisely address the spectrum of risks a restaurant faces. This personalized approach not only ensures comprehensive coverage but also establishes brokers as indispensable advisors who contribute strategically to their clients’ risk management and business resilience, fostering a level of trust and partnership that transcends the traditional client-provider relationship.Strategies for brokers:
- Conduct Thorough Risk Assessments: Deeply understand your client’s operations and risk profile to provide customized advice.
- Offer Proactive Risk Management: Suggest safety programs and technology solutions to mitigate risks, enhancing your value proposition.
- Maintain Regular, Transparent Communication: Keep clients informed about market changes and new coverage options, fostering trust and loyalty.
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.
