Retail & Restaurant Claims: Use Today to Focus on Tomorrow
Apr 7, 2020

The COVID-19 Pandemic and resulting economic turmoil has caused much angst across the globe.  For those of us in the risk management community, our attention is logically focused on responding to the immediate Coronavirus claims that are being reported from our various locations.  As risk managers are trained to do, we should also take some time to focus into the not too distant future.  A little planning now could lead to huge savings down the road.


In the last twenty years, the U.S. economy has experienced two major recessions. With the collapse of the Dow Jones Industrial Average, massive job losses recorded in March 2020, and expectations for record setting drops in quarterly GDP growth, we may well be on the verge of another. Looking back on the results of those recessions, we can get a solid idea of what we might expect in the coming months.



Prior recessions in this century, while both initiated by relatively quick events, were much slower and gradual than what we are facing today.  While the most recent recession of 2008 originated as a result of the subprime mortgage crisis - and was severe and deep – it was much more pronounced in the United States than in other parts of the world.  Both 9/11 and the “great recession” saw rapid and dramatic drops in US employment.  And with those drops in employment, we did see a substantial decline in lost-time claims in 2001 and 2008/09, relative to the previous 20 years. Yet today’s economic crisis is truly unprecedented in both severity and scope - triggered by a worldwide pandemic - and its effect is much more immediate on the global economy. With the entire global economy essentially closing its doors in a matter of weeks and months, we are bracing for uncharted territory.



While we can learn much from how the P&C industry is impacted by economic downturn by looking at the past, this time is truly different.  In the prior downturns in the economy, risk management and clams administration was much less data driven than is the case today. With claims administrators and others tracking COVID-19 related matters closely we can much more clearly tie this pandemic to specific trends.


Outside of data analytics, the retail and restaurant industry has also evolved greatly and taken full advantage of technological advances.  Just twelve years ago who would have envisioned the extent of e-commerce and delivery outside of just pizza.  Because of the ability to see into your data more clearly, you can predict trends that will allow you to adjust your sails regarding what particular aspect of claims management will benefit your organization until we see a move back to the retail and restaurant environment prior to COVID-19.


For risk managers, one silver lining in this dark cloud is the ability to focus more closely on addressing open claims inventories, with fewer restaurants and retailers having employees and guests generating new claims.   With temporary declines in claim volume, risk managers and their TPAs should look to capitalize in the short term, by focusing on closing out long outstanding claims.  You also have the opportunity to look at the areas of your business where your employees or customers may be spending more time than usual to ensure that they are safe and pose as little risk as possible for visitors.


Staying Focused

Despite the daily fires on our desks related and non-related to the Coronavirus pandemic, we need to re-focus on our current claim inventory, predict what may be coming in and revisit our risk management tasks.  In fact, now may be the time to make a positive impact that can be felt far into the future. 

Open Claims Inventory

  • Partner with your claims administrator to establish a closure strategy that is based upon aggressively focus on closing your open inventory.  At the end of the year you should see a spike in closures @ 12 months and may lead to less IBNR development.
  • Triage the inventory of open claims by pre-suit, in suit, approaching statute of limitations and by jurisdictions; determine which courts will more likely be opening up sooner and those that may remain closed longer as part of your strategy
  • Use closing days or other similar formats focusing in on claims with the highest opportunity to close

Safety Measures: Focus on safety measures to prevent losses in newly configured restaurant and retail operations

  • Conduct additional parking lot inspections reassessing lighting, pot holes and sidewalks
  • Revisit landlord agreements indemnification agreements and rules for common areas to ensure there are no restrictions on use as your business model shifts
  • Develop rules for patrons on bathroom use if your business is only offering curbside service
  • Hang signage to remind employees of sanitary requirements
  • Develop new roles for employees solely responsible for cleaning and sanitation
  • Deploy additional security personnel to control premise social distancing and chaos


New Claim Inventory: Revisit how you handle new arising claims considering a fast track approach for less complex claims

  • Use panel counsel and your claims administrator to keep you up to date on state rulings
  • Monitor your new arisings to help predict changes you may need to make in your internal and external vendors staffing models
  • Provide additional support services such as COVID nurse hotline to quickly and effectively assist these claimants
  • Consider your claims administrator as an alternative source of support as your company customer service supports are strained
  • Understand how your claims administrator’s COVID-19 Task Force is working in conjunction with your normal claims teams
  • Use available claim coding for data analysis today and in the future
  • Revisit training needs of vendors, attorneys, safety personnel and claims administrators as your company shifts policies and practices to adjust to the crisis
  • Over communicate with all parties touching your program as change will likely continue



As spring sports were set to start their 2020 seasons right about now, it seems appropriate to use a baseball analogy.  For sure, the Corona Virus has thrown retail, restaurant and food service risk managers a major curve ball.  But one inning does not dictate the outcome of the entire game.  Seize the moment and take advantage of the limited new arisings to focus on other areas so that the 2020 season is a resounding success.


Tim Kelly has 30 + years of industry experience and leads the Restaurant & Foodservice Practice at GB. You can find him on LinkedIn and Twitter.

Mary McGurn has 30 + years of industry experience and leads the Retail Practice at GB.  You can find her on LinkedIn

Dan Link has 16 + years of industry experience and is a leader in the Data Analytics Practice at GB.  You can find him on LinkedIn.



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