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COVID-19 and the leisure and hospitality sector

Risk & Analytics|Risk Management Consulting
COVID 19 Coronavirus

By Kelvyn Sampson | April 7, 2020

This article provides insights on how COVID-19 is impacting the leisure and hospitality sector.

COVID-19 (coronavirus) was confirmed as a pandemic in the UK on 11 March 2020.

The following leisure & hospitality venues* have been asked to close1:

  • Restaurant and cafes (food consumption on site)
  • Pubs, bars and restaurants
  • Cinemas, theatres, concert and bingo halls
  • Museums and galleries
  • Spas, wellness centres and massage parlours
  • Casinos and betting shops
  • All indoor leisure and sports facilities, including gyms

*for the full list of business and venue closures please refer to the Government Guidance

The Government announcements on financial assistance are welcomed but may not be enough to support leisure and hospitality operators.2 These include:

  • Business interruption loan scheme with twelve months interest free
  • Job retention scheme - 80% wages guarantee up to £2,500 per month per employee, backdated to 1st March
  • VAT deferral until the end of June
  • Rent forfeiture moratorium

Despite these measures, operators are mainly concerned with the costs of salaries and rent at a time of little or no income. Investment plans will be halted, potential acquisitions deferred, and new people roles suspended. It is likely that dividends and bonuses will be stopped.

It was alarming to see that the Department for Work and Pensions (DWP) is seeing unprecedented numbers of people seeking benefits during this COVID-19 pandemic. Between 16 March and 1 April 2020, the DWP received 950,000 new applications for Universal Credit3 and were deploying thousands of additional staff to help process the claims. Many of these will be gig economy workers from the leisure and hospitality sector.

The government confirmed that tax benefits will be increased as part of a £7bn welfare boost. Will this be enough to cope with the sharp rise in unemployment?

Misleading media coverage on insurance cover for leisure & hospitality operators

The outbreak of COVID-19 has prompted questions on how insurance policies may respond. Pandemics are generally market-wide exclusions to prevent the whole private insurance industry being exposed to a massive cumulative loss around the globe. Media coverage on this has been misleading, implying businesses have cover under their Business Interruption policy, especially if the government orders the closure of premises.

The outbreak of COVID-19 has prompted questions on how insurance policies may respond.

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.”4

However, our view is that although most leisure and hospitality Operators 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 may be some cover for repatriation costs and cancellation. However, it is essential to follow Foreign and 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 substantive insurance cover available in the traditional insurance market, it is inevitable that even more focus will be on managing assets and liabilities effectively whilst at the same time tightly controlling costs and potentially taking on higher deductibles and reducing policy limits when polices renew. Risk and economic pressures are not the best of friends, but there are a number of things that can be done with little cost that have a material effect on reducing risk. Below we look at areas you may want to consider:

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.
  • Duty of Care - there is obviously a need to keep employees safe with social distancing requirements and provide access to cleaning facilities. This will continue when people return to work.

Crisis Management, Business Continuity and Communications

  • Understand what your critical activities are – 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 etc. take Legal and specialist advice where needed.

Property Loss Control

  • Waste Management - 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.
  • Utilities - 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.
  • Inspections / Keyholder Response - 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. Review keyholder particulars (to ensure the list is up to date and that keys are not held by employees who have been furloughed) and cross-check with the detail held by alarm monitoring companies. Visits should be logged with photographic evidence (date stamped) included.

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.

Engineering Inspections

  • Statutory Plant Inspections - engineering surveyors are being 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 (such as 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.

Cyber Security

  • New systems and applications - every organisation will be more reliant on IT than ever before. 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 COVID-19 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.


  • MOT’s - from 30 March 2020, MOT due dates for cars, motorcycles and light vans will be extended by 6 months.5
  • Motor Insurance - most insurers are confirming their policy still provides cover but are asking that you ensure all policy conditions are met. All reasonable precautions must be made to maintain the vehicle and trailer in a roadworthy condition including protecting it from damage or loss.

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.

Looking Forward to Next Renewal

With your next renewal in mind have you considered how to declare your business interruption values so you have full cover over your indemnity period? Ensure turnover and wage roll declaration have been adjusted due to the current situation.

Ensure you have requested the option of premium instalments plans from Insurers or a third party provider.

Due to the financial difficulties that most leisure and hospitality businesses are facing, difficult decisions will need to be made to reduce insurance cover and increase deductibles. Using the right data analysis will be critical to ensure the right decisions are made, especially in regard to Property Damage and Business Interruption, Employers and Public Liability, Cyber and Directors’ & Officers’ Liability, which make up the majority of the external insurance spend.


Please contact your Willis Towers Watson servicing team if you wish to receive advice regarding your individual cover.

Our thoughts are with all our leisure and hospitality clients and their employees in these extraordinary times.


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.








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

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