Home Pub bar Rising insurance rates add to rising costs for Alberta restaurants and bars

Rising insurance rates add to rising costs for Alberta restaurants and bars

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Mike Clark has been running Mikey’s on 12th, a bar and concert hall in Calgary, since 2007. In those 14 years, he says he never made a major insurance claim, but he still saw its annual liability insurance will go from $ 7,800 to over $ 26,400 this year.

“I think our business is pretty safe, but who knows? “

Brennen Wowk, owner of Bo’s Bar and Stage in Red Deer and vice-president of the Alberta Hospitality Association, is in the same boat. He says alcohol liability insurance rates were rising before the pandemic and are only continuing to rise.

Last year, his insurance jumped 150%, and it’s gone up another 30% this year.

“I have gone through insurance companies that quoted me over six figures for one-year coverage,” Wowk said.

Mike Clark, owner of Mikey’s on 12th in Calgary, has seen his insurance increase 223 percent this year. (Submitted by Mike Clark)

He says Bo’s was almost at risk of not being able to get insurance at all when the pandemic started, and many operators still face this issue.

“I had to travel all over Canada to try to find [an insurer] that would cover me. “

Alberta’s hospitality industry is seeing alcohol liability insurance rates double and triple, hitting concert halls harder than others. These costs are in addition to already rising food costs, global supply chain issues, labor shortages and evolving COVID-19 restrictions. This could see menu prices in bars and restaurants across the province go up.

Mark von Schellwitz, Vice-President Western Region at Restaurants Canada, says it’s not just about insurance. Costs in all areas are increasing for restaurants and bars.

“And of course, it’s really tough with the pandemic restrictions still in place to even generate pre-COVID revenue, no matter how much additional revenue they’re going to have to generate to pay for those increased costs.”

Concert halls are hit hard

Wowk says establishments that consume more alcohol, such as bars, concert halls and nightclubs, often see quotes of $ 50,000 to $ 100,000 per year for proper liability insurance.

“Particularly concert halls – they’ve spent the majority of the last few years shutting down completely, not making a single dollar in revenue. These companies still have to shell out incredible amounts of money just to get their insurance, ”Wowk said.

Ernie Tsu, president of the Alberta Hospitality Association, says the association is trying to understand why concert halls are hit so hard.

“Remember, these concert halls support our local musicians, DJs and the arts community,” Tsu said. “It’s going to be a very difficult task as we approach 2022.”

Ernie Tsu, owner of Trolley 5 and president of the Alberta Hospitality Association, says concert halls in Alberta have been hit the hardest by increases in alcohol liability insurance rates. (Dave Gilson / CBC)

When they reopened, many nightlife venues were not allowed to sell alcohol after 10 p.m., which added to their financial stress, von Schellwitz adds.

“What is the probability with the additional debt that these surviving companies will be able to pay their premiums and survive?” “

That’s what insurance companies are probably taking into consideration, he says.

High risk during pandemic, frequent complaints

Ultimately, these insurance costs all boil down to risk.

Even now, 80 percent of Restaurants Canada members are losing money or barely meeting their expenses, says von Schellwitz.

“They look at all these COVID restrictions and they look at the drop in sales and they think there’s more risk involved, obviously. And as a result, some of them even choose not to offer this insurance, and those who do. offer it at a premium price. “

Chris Hewitt says his pub, Dickens, was closed for 15 months from the pandemic, and when he was ready to reopen this year, his insurance broker couldn’t find a company to buy him insurance. (Submitted by Chris Hewitt)

Chris Hewitt, owner of Dickens Pub in Calgary, says he’s been hit with a 600 percent higher quote than he usually pays, not least because the facility hires security guards and has a trail of dance. Otherwise, he was told it would be cheaper.

“You’d think it would make things safer, but their point is that because you use security, you think there might be something that could fall. It’s almost kind of logic to it. ‘upside down,’ Hewitt said.

He was finally able to get a lower cost, still 60% higher than the original price.

Aaron Sutherland, Insurance Bureau of Canada vice president for the Pacific region, says rates are also rising due to a trend across Canada of more lawsuits and higher payments.

Commercial liability claims increased 108 percent between 2013 and 2020, according to the bureau.

Another trend observed by the office is that when a person is injured or charged with impaired driving, they file a claim against the person or establishment who served them alcohol, he said.

“When someone becomes intoxicated in their business, they are held responsible for that and for any injuries – or at least part of the injuries – that intoxicated person sustains then,” Sutherland said.

Liability insurance claims in Alberta totaled $ 608 million in 2019, continued $ 537 million in 2018 and $ 337 million in 2017.

Clark from Mikey’s on the 12th says he’s also wondering if the increase in costs is related to the subsidies restaurants and bars received from the government during the pandemic.

Menu prices should increase

A Restaurants Canada survey received 747 responses representing 5,926 restaurants across the country.

Of those who participated in the survey, nearly 60% said they plan to increase the prices of their menus by 4% or more, and 23% said they should increase the prices of their menus by more than 7%.

Bo’s Bar and Stage in Red Deer, Alta. Is a popular concert venue that can accommodate up to 1,200 people. (Submitted by Brennen Wowk)

Restaurants CBC Calgary spoke with said they are constantly evaluating whether to increase their menu prices.

“We don’t want the public to feel like restaurants are just finding a way to increase their prices,” Tsu said. “The backs are up against the wall. I’m still trying to get out of this two-year pandemic, I’m trying to get out of debt, coupled with the massive increase in insurance.”

“They will have to look for all possible means to try to reach the breakeven point.”

Going forward, Wowk says he would like insurance companies to look at the history of individual operators to determine their risk and increase their insurance, rather than increasing costs for the industry as a whole.