BARS TAKE NEW HIT
Insurance rates skyrocket
Ottawa's bar owners, whose businesses have suffered from nearly a year of pandemic-related restrictions on socializing, have had to deal with the additional weighty frustration of insurance costs that have as much as doubled.
“What a time to do this to people,” says Phil Bentivoglio, who owns two ByWard Market bars. “Can you imagine our world without bars or places to go? If this keeps going on, that's what's going to happen.”
For Bentivoglio, it was terrible enough already that the pandemic forced him to repeatedly shut his two venues on York Street and then limit their capacities and hours when they could open. Last summer, his insurance woes began, and they continue to this day.
Bentivoglio owns The Twenty Seven Club and Bare Fax, a nightclub and strip club, respectively, in the same building, which he also owns. When it came time to renew his liability insurance, his insurer said it would no longer cover his businesses, Bentivoglio says.
For two months, the club owner shopped around for a new insurer. “I didn't get one quote from any company. I tried every avenue possible,” he says. “The insurance companies left the hospitality liability market.”
He says he was able to insure The Twenty Seven Club just before its policy lapsed only after he converted it to a restaurant. “That's the only way a bar's going to get insurance now,” Bentivoglio says, asserting that insurance companies prefer businesses generating more revenue from food than from alcohol.
But while The Twenty Seven Club was insured, the cost was steep. Its insurance jumped from $11,000 annually to just over $20,000, and Bentivoglio spent an additional $3,000 to insure its patio, he says.
Worse, Bentivoglio wasn't able to insure Bare Fax. It remains closed, and he's put shopping for its insurance on hold until the prospects of meaningfully opening appear.
Bentivoglio is far from alone. Soaring insurance costs have hit restaurants and bars hard, with the latter feeling the hikes even more because pivoting in response to the pandemic has been difficult and bars have generated so little revenue.
Celyeste Power, chief strategy officer for the Insurance Bureau of Canada (IBC), an association that represents the country's insurance companies, acknowledges there's been a “supply-and-demand issue” for hospitality businesses seeking affordable insurance.
The problem predates the pandemic, she says. Before 2020, the global commercial insurance market was going through “a bit of a correction” due to severe weather and low interest rates. “The pandemic really compounded the issue,” Power says.
She says the IBC has put in place several supports for businesses, including a helpline (1-844-2askIBC) and website (businessinsurancehelp.ca). In December, it created a “business insurance action team” dedicated to Ontario's hospitality sector.
“There is capacity out there,” Power says. “Insurance is available … but it is taking a little bit more work.”
Commercial insurance is not regulated in Ontario, and last fall, Premier Doug Ford told the insurance sector it could face possible regulation if it did not help businesses.
“(The) government expects them to step up,” says Scott Blodgett, a senior media relations adviser with Ontario's Ministry of Finance. The ministry will monitor the IBC's business insurance action team and “ensure that insurance companies do their part to help small businesses,” he says.
Bar owners say assurances last fall were too late in coming and that they have not helped.
“Our premier said he was working with the insurance board. That was a giant empty promise,” says Scott May, owner of Bar Robo and Q Bar in the Queen St. Fare food hall in downtown Ottawa.
May was only able to get insurance for his businesses plus the food hall's stage after being turned down repeatedly, despite a sterling payment record and no claims.
“Nobody would offer me any coverage at any cost,” May says. Then, when his original insurer did an about-face and agreed in November to insure May, the cost leaped to $38,000 annually from $17,000, even as May's revenues shrank to a tiny fraction of their pre-pandemic tally.
Brian Beauchamp, owner of the Orange Monkey Bar & Billiards in the City Centre complex, saw his insurance cost rise about 25 per cent.
The hike would have been easier to stomach if his insurance had compensated him for the days he was forced to close last year because of COVID -19, he says.
“I was denied coverage, of course, for the losses that occurred due to the pandemic,” Beauchamp says. “It was surprising given that it seemed like a co-ordinated response by all the insurers, it took them a couple of weeks to scramble to put together this denial which seemed to be the same from company to company.”
He says the argument by insurers is that there has to be physical damage to a premises for a payout to take place. And yet, the insurers compensated businesses when they had to close after tornadoes hit Ottawa in September 2018, causing mass power outages, Beauchamp adds.
“I kind of feel like, why are people getting so penalized in a situation they did not create, when they previously had paid their insurance?” Beauchamp says.
Kelly Brant, one of the owners of the 23-year-old ByWard Market business The Lookout Bar, says that after months of shopping for insurance last fall, her bar's insurance fees almost doubled to $20,000 annually.
She, too, says she was told to pivot her operations, which have never had a claim, to serve more food in order to get insured. Brant says because of COVID -19, dancing is out and the bar is more of a pub.
“If you have higher liquor sales, you're going to pay through the nose, basically,” Brant says. “The problem is we're only able to have 50 people inside, and here we are paying these skyrocketed insurance rates.”