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COVID-19 and the food and drink sector

Risk & Analytics
COVID 19 Coronavirus

By Sue Newton | April 24, 2020

This article explores the impact of COVID-19 on the food and drink industry.

Whilst COVID-19 is having a serious impact on some industries, the pandemic has brought significant challenges to the food and drink sector, often dealing with an unprecedented level of demand, coupled with substantial workforce shortage.

The need for business resilience is vital, from suppliers to retail customers, to deal with the changes in demand. This is exacerbated by the fact that this is a global crisis, impacting everything from raw materials to availability of labour throughout the production and delivery chain.

There is much to consider as these challenges and pressures become the norm. This article highlights some of the key areas that can be addressed to support resilience and also prepare for when the crisis ends.

Make sure your broker is advised of business changes

If any changes have been made to your business mode as a result of COVID-19, such as the manufacture of new products or increased values, advise your broker at the earliest opportunity, as these may constitute material facts to insurers. Failure to do so could void the terms of your policy.

Some businesses in the sector will have laid up/SORN vehicles, furloughed employees and reduced their turnover and profit forecasts. It is important to discuss these with your broker, as it may be possible to negotiate a reduction in premium to reflect these changes.

Misleading media coverage on insurance cover

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.”1

Our view is that whilst some businesses in the food and drink sector will have extensions under their business interruption policy for notifiable disease, prevention of access and possibly loss of attraction, these will, in nearly all instances, exclude cover for new notifiable diseases (which COVID-19 is) and pandemics.

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 improving resilience, managing assets and liabilities effectively, while ensuring production levels meet demand. During this unprecedented time, it is still important to challenge your risk and insurance programme to ensure they support your business and operational needs.

Risk management and demand pressures present unique challenges. We highlight below some areas for consideration as well as practical advice on mitigating risk, particularly if this involves new processes and employees:

Health and safety

In response to the immediate changes to working practices regarding COVID-19 businesses have new and additional pressures. These may include, due to increased demand or new products resulting from nationwide shortages, a lack of employees to complete specific roles. This shortage may necessitate a need for enhanced induction and training protocols, as new employees may not necessarily have manufacturing experience.

It is advised that employers implement social distancing in accordance with government advice,2 which should be adhered to by employees. Where the production process makes this difficult to do, employers should consider what additional measures should be put in place. Government advice states that ‘the practical implementation will depend on local circumstances’.3 Therefore, risk assessment and procedures should be reviewed, and where practicable the two metre rule applied, with floor markings to assist with this. If not practicable, additional control measures should be considered and documented.

These may include enhanced hygiene measures in communal areas of the site, staggering breaks, limiting non-essential movement, non-contact deliveries and only essential visitors to the site, as examples.

Regarding health and safety, the methodology of training employees, updating risk assessments and associated safe systems of work and maintaining behavioural safety standards is key to managing risk during this period. As ever, good standards of record keeping will be essential in ensuring claims defensibility.

Working from home

Employees may be required to work from home; ensuring a safe working environment at home is a key consideration. Employing remote work technology and a work-from-home strategy presents employers with additional safety concerns related to a changed work environment over which they have little to no control. Empowering employees to implement defined risk assessment strategies related to ergonomics, reducing slips, trips and falls, fire/electrical safety and security issues may help employers minimise their liability and help keep staff safe while they work from home.

Crisis management, business continuity and communications

It may not be possible to fully satisfy the level of demand, due to factors beyond your control, such as a shortage of people or the need for social distancing on production lines. In these situations, reacting quickly (or even better before the situation deteriorates) will help mitigate the impact. Points to consider include:

Understand 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, machinery, equipment and raw materials) you need to support these critical activities. Do you know how to obtain these at the required resourcing level – think particularly about alternative sources of supply.

Identify key stakeholders and keep them informed - you want to be sure that they stay with you during and after the crisis.

Take control - make sure your message content demonstrates that despite the seriousness of the situation you are in control of those factors you can influence.

Engineering inspections

For inspection of statutory plant and equipment, engineering surveyors will be deemed ‘key workers’ for inspections to critical industries,4 including food and drink manufacturers. Look to actively manage inspection dates with the provider. If inspections are not completed within the laid down timescale and production and use of equipment is required, you may be in breach of the statutory regulations until the inspection has been carried out.

Motor fleet

Minimise disease spread to protect your drivers by considering changes in the way they commence duties, such as staggering 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 may help minimise the spread.

Minimise disease spread to protect your drivers by considering changes in the way which they commence duties.

Personal protective equipment (PPE): Ensure drivers have sufficient PPE to undertake common contact tasks such as refuelling and ad blue refills to vehicles from the same depot pumps.

Fatigue management: Following the relaxation of driver hours in relation to the COVID-19 pandemic, there is greater focus on fatigue management, especially following the first ever driver fatigue prosecution by the ORR.5 Robust management of practices and policies is advised to avoid significant regulatory fines and/or penalties.

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 circumstances in relation to COVID-19 could affect drivers’ health and wellbeing.

Hijacking risk: Consider the possible risk of increased hi jacking of vehicles if specific items become in short supply to fuel the black market. Consider if increased driver security and increased communication is needed, including determination in advance of safe parking areas.

Please visit the Willis Towers Watson COVID-19 hub for further information on the above and for the latest information and guidance.

Please also feel free to use e-mail box for any questions you may have:


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.

COVID-19 is a rapidly evolving situation and changes are occurring frequently. 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.








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