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COVID-19 and the retail industry

Risk & Analytics|Future of Work|Risk Management Consulting
COVID 19 Coronavirus

By Kelvyn Sampson | April 2, 2020

COVID-19 could have a devastating impact on some retailers despite government measures to limit the damage.

There is no doubt this is an unprecedented and very difficult time for the retail sector. Government announcements to offer a 12-month business rate holiday and the Job Retention Scheme are welcomed but they may not be enough to support some retailers in what have been a tough few years. WH Smith and Superdry have issued profit warnings, citing COVID-19 as a key factor. Inditex, the parent company of Zara, stated sales dropped 24% in the first two weeks of March1. In the worst cases, retailers could fall into administration. Laura Ashley was the first high-profile retailer to do this with fears others could follow if COVID-19 continues throughout 2020.

Many retailers had voluntarily closed premises to prevent the spread of COVID-19 and also to reduce operating costs, but it was announced on 23 March that all non-essential retail stores are to be mandatorily closed, due to the public not adhering to social distancing and isolation advice provided by the government. The only stores allowed to remain trading are2 :

  • Supermarkets and smaller shops selling food, health shops and pharmacies
  • Petrol stations
  • Bicycle shops
  • Home and hardware stores
  • Laundrettes and dry cleaners
  • Newsagents
  • Post offices
  • Banks

Misleading media coverage on insurance cover for retailers

COVID-19 has prompted many questions on how insurance policies will respond. Pandemics are generally market-wide exclusions to prevent the whole private insurance industry being exposed to massive cumulative losses globally.

Media coverage on this has been misleading, implying businesses have cover under their business interruption policies, especially if the government orders the closure of premises. The Association of British Insurers stated: “Only a very small minority of businesses choose to buy any form of cover that includes local closure due to an infectious disease. An even smaller number will have cover enabling them to potentially claim on their insurance for the presence or impact of the coronavirus pandemic.”3

However, our view is that although most retailers will have extensions under their business interruption policy for notifiable disease, prevention of access and loss of attraction these will, in nearly all instances, exclude cover for new notifiable diseases (which Covid-19 is) and pandemics.

On other policies, such as group personal accident and travel, there is some cover for repatriation costs and cancellation, however, it is essential to follow Foreign & Commonwealth Office (FCO) advice otherwise it is unlikely your travel policy will respond. The current position advises British nationals against all but essential international travel.

Operational risk management considerations

With no insurance substantive cover available in the traditional insurance market, it is inevitable that even more focus will be on managing assets and liabilities effectively, while at the same time tightly controlling costs. This could mean potentially taking on higher deductibles and reducing policy limits when insurance policies renew.

Risk management and financial pressures are never the best of friends, but we highlight below some areas for consideration as well as practical advice on mitigating risk:

Risk management and financial pressures are never the best of friends, but we highlight below some areas for consideration as well as practical advice on mitigating risk:

Property loss control

Waste management

Ensure all waste, pallets and skips are collected and/or removed from site. Lock bins which can be locked and relocate to a secure area / compound. Insurers will often ask for 10 metres to be achieved but bear in mind this tends to apply when waste is being generated and the risk needs to be managed. The main hazard from waste storage is malicious fire and this will be reduced if the area around the building is clear and bins are empty.

Empty bins however are more portable and there is the potential they could be used as a staging platform for access to higher levels of the premises – increased theft potential. Consider storing bins inside the premises. Where this is not practical secure bins to each other with a chain(s) and a padlock either to a fixed point and/or keep well away from the building.


Turn off any non-essential electrical supply to the premises whilst ensuring automatic fire and detection systems, any electronic physical protection e.g. security shutters and intruder alarm systems remain operational. After 30 days, review the water system / supply to the premises. Consider draining down heating systems - please refer to your local Willis Towers Watson office / contact where sprinkler protection is installed. Isolate the water main at the stopcock / incoming valve or at the very least isolate water supplies to installed domestic type appliances e.g. dishwashers, washing machines; vending machines and automatic toilet flushing systems.

After the peril of fire insurers are concerned with water damage, with many imposing restricted cover / exclusions when premises are unoccupied after a set number of days.

Inspections / keyholder response

Heed government advice in what is a fluid situation. Where possible, carry out inspections (which may vary in regularity due to restrictions in place and the degree of hazard presented) to ensure the building remains secure. Consider drive-by visits to avoid unnecessary contact. Review keyholder particulars and cross-check with the detail held by alarm monitoring companies. Consider lone working implications and what is expected from inspections. Visits should be logged with photographic evidence (date stamped) included.

There should be clear instruction around escalation procedures. Discuss options with your local Willis Towers Watson office / contact where insurers are imposing terms.

Health and safety

Changes to your business model: Changes to your business model, due to updates to government advice, may necessitate enhanced induction and training protocols as employees may not have undertaken these activities previously e.g. home deliveries, new products and services.

Working from home: Employees may be required to work from home; ensuring a safe working environment at home is a key consideration.

Mothballed sites: Accessing mothballed sites for ongoing work activities requires a risk assessment. This may include personal security and potentially lone working risks.

Crisis management, business continuity and communications

  • Understand what are your critical activities – i.e. those that provide the most value for your business. Ask, what it would cost your business if you do not complete them for a period of time?
  • Develop a minimum resource model so you know what resources (space, people, IT, machinery, equipment, materials and documents) you need to support these critical activities. Ensure you know how to obtain these at the required resourcing level – think particularly about alternative sources of supply. It may be necessary to redeploy resources to alternative tasks.
  • Identify key stakeholders and keep them informed. You want to be sure that they stay with you during and after the crisis.
  • Your customer base is your future: Look at ways to keep the dialogue alive and your brand in mind e.g. through social media, targeted advertising with relevant messaging, post COVID-19 activity announcement.
  • Take control: Make sure your message content demonstrates that despite the seriousness of the situation you are in control of what you can influence and within reason it is business as usual e.g. activated business continuity plans, continue to fulfil online orders etc.
  • When making difficult decisions where these do need to be made e.g. worker layoffs, store closures, then make sure the narrative and context is properly crafted and accompanied by statements which portray concepts such as reluctance, last resort etc.


  • New systems and applications: Many organisations will be more reliant on IT than ever before. You must understand which new systems/applications are being used and assess how this impacts the overall cyber risk position within the business.
  • Personal email addresses: It may be necessary to periodically remind staff to only use approved IT systems when handling personal data and not to send it to their personal e-mail addresses. Whilst this may allow them to do their job, it does increase the risk of it being compromised.
  • Increased phishing activity: The National Cyber Security Centre has already highlighted how criminal organisations are targeting businesses with coronavirus themed e-mails. Ensure that your business takes regular backups and can defend against ransomware attacks. You may want to consider increasing the number of times when you take backups, and plan for a worst-case scenario of your network being taken offline (think pen and paper).
  • System updates: Continue to patch and update systems, ensuring your business is secure online remains key to minimising your cyber risks.

Motor fleet

  • Static loss: There are increased static loss risk considerations if quantities of vehicles are taken off the road. You need to consider how and in what density will vehicles be parked. Will this affect other operations at depots?
  • Increased vandalism and increasing awareness of possible rises in vandalism and theft from parked vehicles. Consider if your security arrangements are adequate.
  • Minimise disease spread to protect your drivers, consider changes in the way which they commence duties such as staggering of start times to ensure social separation, implementation of additional cleaning of vehicle cab interiors and minimising the rotation of vehicles between different drivers. This may affect operational efficiency but minimise the spread.
  • Sufficient Personal Protective Equipment (PPE): Ensure drivers have sufficient PPE to undertake common contact tasks i.e. refuelling and ad blue refills to vehicles from the same depot pumps.
  • Continue to meet legal requirements if the redeployment of drivers to other operators or operations, either voluntary or enforced, is commenced.
  • Regular communication: Increase day-to-day communication with drivers to promote wellbeing. It could be argued that the job will be less stressful due to less traffic but other considerations as well as fatigue could affect drivers’ health and wellbeing.
  • Hi-jacking risk: Consider the possible risk of increased hi-jacking of vehicles if specific items become in short supply to fuel the black market. You will need to ensure drivers security is enforced and communication is increased which might mean a relaxation of any rules associated with the use of hands-free mobile phones whilst driving and determination in advance of safe parking areas.

Make sure your insurers and broker are advised of business changes

It is important to notify your insurers and broker as soon as possible when changes are being made to your operations.

Unoccupied premises

For example, retailers should check their property insurance policies for an “Unoccupied Premises” clause as it is common for insurers to apply conditions for premises that will be closed for long periods. These can include turning off all sources of power, fuel and water at the mains; regular internal and external inspections of the building; and securing letter boxes. Individual policies should be reviewed to ensure all conditions are met. Also, there is likely to be restriction in covers like malicious damage and escape of water.

Owner-controlled construction insurance policies

We fully expect that there will be an enforced closure of non-critical construction sites. If it is necessary to mothball any of your refurbishments or new build sites then please take all reasonable measures to secure the relevant sites and advise insurers of the closure and measures taken.

And a note on engineering inspections

For inspection of statute plant and equipment, Engineering Surveyors will be deemed ‘key workers’ for inspections to critical industries or those within their supply chain only. Inspection companies will now prioritise industry sectors considering their criticality, with the highest priority being given to facilities that are crucial for the treatment and containment of the virus and/or the general infrastructure of the country. For example, but not limited to, industries linked to health, food, water and power. At this time, it is understood that all other statutory inspections will not take place although this is an area under review by the inspection companies and more information will follow.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage.

The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates.

The information given in this publication is believed to be accurate at the date of publication shown at the top of this document. This information may have subsequently changed or have been superseded and should not be relied upon to be accurate or suitable after this date.


Please contact your Willis Towers Watson servicing team if you wish to receive advice regarding your insurance policies or for further risk management advice.

Our thoughts are with all of our retail clients and their employees in these extraordinary times.

Please visit the Willis Towers Watson Covid-19 website for the latest information and articles






Kelvyn Sampson
GB Industry Practice Leader – Retail and Leisure & Hospitality

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