Fish and chip shop insurance is one type of cover that insurers either do well, do poorly or they don’t do it all.
One of the main managing general agencies in the UK for the past few years have just announced that, with immediate effect, they are no longer underwriting takeaway insurance, which includes the traditional chippie.
But why is this happening? Simply put, it is all down to two things. Basic economic supply and demand and insurers inability to gain critical mass. One of the main principles of business insurance is that the premiums of the many help to pay for the claims of the few. If an insurer insurers enough of a particular type of risk (ie houses, cars, hotels, office etc) then across a 12 month period the premiums all put together should cover the claims that come in. There will be good, excellent, poor and terrible years. Over the years though, the rough and the smooth balance and everyone is happy.
But, fast food insurance does have it’s fair share of claims and many insurers have dipped their toe in the water (because there are so many takeaways and they just see the £ signs) and decided to start insuring them. But, if they are not getting the correct price and enough of them (to get the critical mass) then they will simply not make money, year in year out. This means it is uneconomic and it does not take a rocket scientist to work out that if you stop insuring them, you will start to lose less money.
These things happen throughout the insurance cycle, it is not a problem or an issue as there will always, without fail, be someone else willing to provide cover for a similar type of premium and cover, you just need to spend a bit more time looking.