Opening a bar or nightclub is often considered a risky business, but there is no doubt that some ventures are riskier than others: a discotheque catered to the university crowd, for example, may routinely face a wide range of insurance claims that an upscale martini bar never encounters.
This is what makes the task of hospitality underwriting such a challenging, but exciting, endeavor.
“I find it a very interesting class of business,” said Zena Nucifora, senior underwriter with South Western Insurance Group Ltd. “Maybe that’s why I’ve been with it so long. It’s never the same since bar owners are always trying to seek out what’s current in order to bring in a new set of clientele.”
As such, brokers must align themselves with underwriters who stay on top of hospitality trends and the potential risks attached to them.
In addition to age groups, underwriters need to consider such dynamics as venue and timing – not merely examining brick and mortar establishments, but any place where liquor is served.
This is something Nucifora does on a regular basis.
“We customize policies. We’ll take a bar and look at what else they do.,” she said.
“We also look at what else goes on or what draws a crowd. Do you have dancing? Or do you bring in a band at a certain time? The exposure has now increased – customers are not just there to eat, but also to meet new people, dance, have a good time, and drink socially.”
In addition to the multifaceted nature of this class of business, Nucifora notes that the adult beverage industry is always evolving and new developments provide constant learning opportunities for the insurance professionals who work with them.
One recent phenomenon is pub crawls, or events where groups of coordinated drinkers travel from bar to bar, drinking in each watering hole. This presents an enormous obstacle for both brokers and underwriters, as a host of claims can result from these gatherings.
In addition to the risks inherent in customers becoming progressively more impaired at each establishment, and bar owners taking legal responsibility for these patrons as soon as they walk through each door, questions arise as to what should happen at the conclusion of the event.
“Where do they take you at the end of the night? Some parking lot, or should someone drive you home? Is anyone obligated to make arrangements to ensure you get home safely? If they drop you off at a parking lot and you get in your car and drive impaired, then get into a motor vehicle accident, all five bars are now going to be sued and the courts may backtrack to determine how many drinks you had at each place,” Nucifora said.
Finally, even with her decades of expertise, there are still new developments that baffle Nucifora, such as the development of alcohol in powdered form, which she wonders, “how the heck are we going to get around that?”
Still, these trials make the jobs of involved insurance professionals all the more rewarding.
“This is a wonderful class, as there will always be a need for this coverage,” Nucifora said. “And if it’s not going to go away, we might as well fine-tune it to make it a winning class of business instead of one that always loses.”