Insurance industry association launches project to help Ontario hospitality sector find coverage

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The Insurance Bureau of Canada is offering to help members of Ontario’s hospitality sector struggling to renew policies owing to increased premium rates, but restaurant owners say the move will deter the Ford government from taking regulatory action against insurers who are dropping coverage for the sector.

The IBC – a national industry group with 74 insurance company members – announced on Thursday its plans to introduce a “business insurance action team” (BIAT) to help Ontario-based small businesses in the hospitality sector find affordable insurance if they have been affected by COVID-19.

In recent months, Ontario restaurants and bars have seen big spikes in their annual insurance premiums when trying to renew policies, some being raised as much as 300 per cent. Other establishments have been refused insurance entirely – putting them at risk of having to shut down.

The formation of the new team, which is expected to begin its work in early November, followed a Zoom meeting last Friday between IBC, several chief executive officers from major insurers, Ontario’s Finance Minister Rod Phillips and Premier Doug Ford.

Mr. Phillips organized the meeting to demand the industry “come up with a solution in a matter of days not weeks” and said he will do “whatever it takes to protect small businesses,” spokeswoman Emily Hogeveen told The Globe on Thursday.

The approach of the BIAT team will be to work directly with insurance brokers and business owners, and act as a risk manager and “committee of insurance companies,” to review and assess eligible business applications to make loss-prevention recommendations and determine the level of coverage and overall cost.

But John Sinopoli, co-owner and executive chef at the Ascari Hospitality Group – which runs three restaurants and a bar in Toronto – says IBC’s action team doesn’t address the real problem of Canadian insurers “just dropping” the hospitality sector altogether.

“The insurance industry is now panicking because they know they are two steps away from being regulated in terms of the hospitality industry,” says Mr. Sinopoli, who helped create a coalition of about 1,300 restaurants through a website, Savehospitality.ca. “These establishments already had insurance so why all of a sudden is it gone – after decades of us loyally paying our premiums and making very few claims. Where is that discussion?”

Mr. Sinopli says the move by IBC is reducing pressure on the minister to take immediate action, causing further delays “while people continue to lose their insurance coverage.”

“The [insurance] industry clearly has shown they cannot act in good faith without regulation,” says Mr. Sinopoli. "If there is ever a way for the Ford government to show they don’t stand up for gouging, that they stand up for the little guy and that it is not just lip service, then we need to see regulation because people are losing their livelihoods that they have spent decades building.”

IBC spokeswoman Celyeste Power says the association is speaking to all Canadian insurers – even those companies that currently do not underwrite large commercial policies – to identify companies that will provide specific coverage to the hospitality sector.

Ms. Power says the IBC plans to expand the action team to include other sectors and provinces such as Quebec, which is seeing a second wave of COVID-19 cases further harming businesses.

Dan Kelly, CEO of the Canadian Federation of Independent Business – an association with 110,000 small-business members – says while the new strategy is not the panacea for all small businesses, it is a positive first step by the insurance industry in acknowledging that “something is pretty seriously wrong right now.”

“That is considerable progress but there are many other provinces and sectors that are facing similar rapidly rising insurance rates in their policies” Mr. Kelly said. “We continue to see these firsthand examples of small-business owners who are hearing upon renewal that their current carrier is not going to continue to [provide coverage] or that the rates have become impossibly high.”

Mr. Kelly says he is encouraged with how quick the IBC reacted to the current situation during COVID-19.

“If there is anything I have learned during this pandemic is that government action can take dramatically longer than action by the private sector itself so I would not at all be convinced that calls to government would be any faster, or more comprehensive, than what the industry is looking to take on its own.”

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