Rising insurance costs another blow for businesses amid pandemic

·4 min read

The Patio Lounge, like other bars and restaurants in downtown Windsor have had a difficult year.

Changing restrictions and requirements have made a tough situation even worse for business owners. Now one of their biggest costs of the year, in some cases has doubled.

"Our renewals have come in throughout the year and notice that either we were not renewed or our premiums have completely doubled or tripled in some cases, for the coverage that we would have had otherwise," said Wade Griffith, owner of Patio Lounge.

The insurance for his business went from $4,000 to $8,900. The increase had affected his bottom line.

"In a year that we've had 50 per cent of our sales or more some months zero sales, but I'm still having to pay the premiums during that period," Griffith said. "So to pay an additional amount over the year is very discouraging."

His broker told him that claims were high overall for all insurance companies.

"I don't understand how the premiums could be increasing when most of us were in lockdown for almost six months," said Griffith. "There could be no claims during that period. So it doesn't quite make sense why our premiums are doubling this year."

Stacey Janzer/CBC
Stacey Janzer/CBC

Griffith said business has been difficult during the pandemic, especially in comparison to the busy year Patio Lounge had in 2019. In the last week, businesses have had to change how they operate on short notice due to new restrictions. Last week Griffith could keep his bar open until 2 a.m., now he has to close by 11 p.m.

"We're not getting any compensation from the government to say, 'Hey, here's how we're going to help you during this crisis.' The wage subsidy helps, yes. The rent subsidy we've been waiting on for almost three months," said Griffith.

It's not just restaurants that have had their insurance cost rise. CAN-AM Recycling Inc., in Tilbury, Ont. was told by their broker they could no longer insure them, because they were plastic recyclers.

"In June, we were told at the very last moment that we couldn't get coverage, so we were forced to go to another broker and the other broker had to do some very quick work and find us somebody that would insure us," said Barbara Cheifetz, CFO of CAN-AM Recycling Inc.

They have been in business for 18 years and she said have only made one claim after a lightning strike caused damage. The insurance for them went up 50 per cent.

"I felt that it was not fair, that we were all painted with the same brush, because we've never had any issues," Cheifetz said.

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The pandemic has hit their business too, but luckily staff lay offs have been avoided. The company allowed those who weren't comfortable to work to stay at home, even though they are considered essential workers. She said the company continued to pay their benefits. Now with the additional insurance cost it's hard to take.

"It was just like a slap in the face finding out that insurance is just going to be outrageous, like we already got punched in the stomach like everybody else, and then we get punched again," Cheifetz said.

Prior to the pandemic, the commercial insurance market was going through a change, said Celyeste Power, spokesperson for the Insurance Bureau of Canada.

"The commercial market was going through a bit of a correction and we have ended up with a bit of a supply and demand problem," she said.

Businesses are still in need of insurance, she said it could be even more than before, but there are less insurers in the market that will offer it.

"That's creating a bit of chaos in the market for small businesses right across the province and across the country," Power said.

Low interest rates, coupled with severe weather events increased claims, she said. Adding those factors to a pandemic made a bad situation worse.

"It's creating even more challenges for businesses, insurers, small businesses, retailers, restaurants alike have sort of created, unfortunately, a bit of a perfect storm of events that is impacting our businesses," said Power.

Due to the difficulty for businesses to find insurance, the Insurance Bureau of Canada created the Business Insurance Action Team.

"We also have a business helpline set up with experts from the insurance industry that don't work for one company or the other," Power said. "So there's no bias set up to help customers right away and sort of navigating what is a bit more of a challenging market."