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The hospitality sector can be a tough market for the insurance industry. The level of risk and sheer volume of claims from slips, trips and falls and kitchen fires is extremely high and it’s becoming even more challenging for brokers due to the shrinking marketplace. A major insurer announced this summer that it was exiting the hotel market as the cost of settling claims had become too high[i].
However, with a proactive and robust approach to risk management, the hospitality sector can be a profitable area.
We take a closer look at some of the key risks facing the hospitality industry and what brokers can do to help clients manage those risks effectively.
Grease fires in restaurant and hotel kitchens are a huge risk and can have a devastating effect on businesses, as well as resulting in significant insurance claims. However, taking the correct preventative measures can help reduce the risk of fire.
Earlier this year, a new specification, TR19 Grease, was introduced by the Building Engineering Services Association (BESA) to encourage better fire safety management of kitchen extract systems.
The new standalone standard was developed from section 7 of TR/19 and places significant emphasis on controlling fires from grease build-up in kitchen extract systems, which is a known cause of fires.
It is much more prescriptive than previous standards and states that all contractors cleaning kitchen extracts must have a BESA Grease Hygiene Technician (GHT) qualification. It also states that each kitchen extract clean must be registered on a portal with full details of where and when the clean was carried out and whether the system was fully or partially cleaned. If a system was only partially cleaned due to being unable to access certain areas, contractors need to state exactly which areas weren’t cleaned and why and make recommendations for how to gain access moving forwards.
Nick Maddox, Director at 4Sight Risk Management, says the measures are a welcome development for both the hospitality industry and insurers.
“There have been multiple fires in recent times as a result of improper cleaning of kitchen extractors. And in some cases, fires have occurred where kitchen ducts haven’t been cleaned to a standard, resulting in insurers refusing the claim,” he says.
“The new standards are much more prescriptive and can help give everyone involved peace of mind that kitchen extracts have been cleaned to the proper standard.”
He adds that, moving forwards, brokers need to ensure their clients understand insurers’ expectations around the TR19 Grease standards, as well as other industry standards including DW/172, RC44 and RC16B.
“Brokers can assist clients in understanding the standards and finding accredited, qualified contractors to carry out their cleaning work,” Nick says. “It’s important to check that not only are clients using the right cleaners, but that they are getting their extractor cleaned at least every six months, as outlined in the new standards, or more frequently if it’s required by the terms and conditions of their insurance policy.”
In addition to ensuring that cleaning is carried out regularly and to the correct standard, there are other measures hospitality businesses can take to minimise the risk of grease fires.
For example, Dr Samantha Mudie, project manager at Quintex Systems, recommends using baffle rather than mesh filters in commercial kitchens as they remove a greater proportion of grease. Baffle filters comprise a number of interlocking vanes which act as a barrier in case of flash fire as well as forming a two-pass grease removal device. They also prevent grease from entering the ductwork, which reduces the overall risk of serious fire as even if a spark did ignite, the ductwork would be less greasy, and the fire would be less likely to spread throughout the building.
Slips, trips and falls
Slips, trips and falls are the most common cause of injury in UK workplaces[ii], and the high footfall in hospitality businesses makes them particularly susceptible to accidents and claims.
While it’s not possible to prevent all accidents, ensuring businesses adequately assess ongoing hazards which could cause slips and falls, for example improperly maintained floor areas or exposure to water ingress, is vital and can help minimise accidents. Staff should also be encouraged to immediately report spillages or other hazards which could cause injury.
Insurers and brokers can be proactive in helping businesses understand the risks they face, offering guidance and training and ensuring they have the relevant procedures and policies in place to adequately protect staff and customers[iii].
Businesses which serve food and drink must ensure that they are compliant with allergen labelling regulations or risk severe penalties[iv]. Under the EU Food Information for Consumers Regulation, businesses must ensure they provide accurate information on 14 key allergens for both pre-packaged and non-packaged food and drink and also handle and manage food allergens adequately.
The 14 key allergens covered by the regulation are celery, cereals containing gluten, crustaceans, eggs, fish, lupin, milk, molluscs, mustard, tree nuts, peanuts, sesame seeds, soybeans, sulphur dioxide and sulphites (if they are at a concentration of more than ten parts per million).
It is also advisable that businesses have Public Liability insurance in place to cover the cost of any legal action and potential pay outs if someone does have a reaction to anything consumed on their premises.
High staff turnover
The hospitality sector is known for its high employee turnover rates, with a retention rate of 70%, according to figures from YouGov’s Retaining Britain’s Hospitality Workers report[v]. This means three in 10 employees within the industry leave their role within a year of starting it, and it is likely that the situation will worsen once Britain leaves the EU.
A revolving door of employees coming and going can have an impact on Employer’s Liability cover. It’s essential that businesses adequately document and record all their staff training and conduct the training in different languages. They should be able to provide their insurer with a documented training programme if a claim occurs.
Businesses also need to provide a thorough onboarding process and training, so staff know how to use equipment properly and are clear about health and safety procedures, for example, how to properly clean up a spilled drink to prevent people slipping on it, to help minimise the risk of accidents and injuries.
Great British staycations
The weak pound and Brexit uncertainty have contributed to a rise in the number of people holidaying at home in the UK, with research showing bookings for domestic holidays were up by a third this summer[vi]. With booking levels likely to be on the rise, it’s important your clients assess the extra risks of having higher occupancy levels.
It’s also worth reminding your clients to keep you updated about their turnover, profitability and wage roll as these are key factors for rating their liability.
How NIG can help
AT NIG we have a proactive and robust approach to risk management within the hospitality sector. We offer risk guidance to clients to help them ensure their facilities are compliant and up to standard.
For more information about our Hotel & Leisure Combined product head to our product page to take a closer look at our policy features and benefits or give your NIG sales contact a call.