Our corporate site Contact us

Article

Managing rising liability costs through a robust pre- and post-loss strategy

Learn how restaurants and retailers can manage rising liability costs through robust pre- and post-loss strategies that strengthen prevention and claims handling.

A convergence of legal, operational, and insurance-market pressures is leading to a rise in liability costs for restaurants, retailers, and food and beverage companies. While high profile “nuclear verdicts” continue to draw attention, many organizations are experiencing pressure from a more pervasive challenge: incremental increases in everyday general liability and auto liability claims that can quietly erode budgets over time.

These historically overlooked cost increases are showing up across the claims spectrum, and may create volatility that strains budgets, complicates forecasting, and erodes margins — even for organizations that have avoided catastrophic losses.

Consumer facing businesses have to contend with a compounding challenge: the way an incident is perceived and handled in the moment can impact the outcome. Claims involving customers or third parties can escalate quickly when individuals feel unheard or confused about the process. Even relatively minor incidents, such as slips and falls, are more likely to escalate when customer frustration is not quickly defused. Once legal representation enters the picture, costs can rise sharply.

For organizations that operate on razor-thin margins, managing these increasing costs through a pre- and post-loss strategy can become more important and can have a significant impact on reputation. But effective liability management often requires more than awareness of social inflation or insurance pricing trends. It calls for a tactical, end to end approach that strengthens prevention, enables early intervention when losses occur, and aligns claims handling, data, and executive communication aimed at reducing surprises and protecting financial outcomes.

Strengthening the pre-loss foundation

One of the strongest defenses against rising liability costs may begin well before a claim is filed. Organizations that understand their risk profile and proactively identify emerging exposures are usually better positioned to prevent incidents and limit downstream severity. Actions can include:

1. Replacing check the box programs with defensible risk controls

High performing organizations may move beyond compliance driven approaches toward systems that clearly demonstrate how and why risk decisions are made. In the auto context, this can include defensible driver qualification standards, continuous monitoring of motor vehicle records, and documented driver safety training practices that reflect real world risk.

The same mindset can also be applied to stores and restaurants. Many senior leaders are examining inspection processes, cleaning protocols, and AI camera technology to make sure these are consistently enforced and documented.

Aside from helping to prevent incidents, these controls can strengthen an organization’s position when claims are scrutinized after the fact.

2. Using data as a leading indicator to identify risks before incidents occur

Telematics, wearables, and safety technologies are now widely adopted. The differentiator often lies in using that data to anticipate risk rather than simply record it. Organizations that analyze behavioral patterns and intervene early — through coaching, targeted training, or operational adjustments — may be better able to reduce claim incidence and severity. Applying actions across the organization can help extend the program’s impact.

Retailers too can increasingly leverage store-level data to identify potential hazards, for example, wet floors near produce areas. For restaurants, monitoring trends in alcohol service and guest concerns, among others, can help identify potential hazards and de-escalate situations before they result in injuries or confrontations.

3. Treating third party and non owned exposures as core risks

Outsourced delivery, gig labor, and employees driving personal or rental vehicles on company business are no longer peripheral exposures. And it is prudent for organizations to demonstrate reasonable care in how these risks are managed[WK1.1].

Retailers and restaurants that rely on third-party or last-mile delivery providers are paying close attention to qualification standards, contractual risk transfer, and oversight practices in an effort to mitigate risks. Treating third party and non owned auto exposures with the same rigor as owned operations may help reduce uncertainty and prevent surprises when incidents occur.

Preventing manageable claims from becoming runaway costs

The best preventative efforts will not eliminate all losses. The difference between manageable losses and runaway claim costs often comes down to how organizations respond and how they address these losses in the first days and weeks after an incident. With the aim of better managing claims, consider:

1. Adopting an early resolution philosophy

Claims that linger are more likely to escalate in cost and complexity. Organizations that align internal teams and external partners around a shared understanding of when and how early resolution should occur often see better claim resolution outcomes.

This approach can be especially critical in customer-facing claims, where early acknowledgment, respect, and clarity can prevent an incident from escalating into a formal dispute.

Documenting this philosophy — and reinforcing it through consistent oversight — may help allow for early, informed decisions that are made before positions harden and costs increase.

2. Turning claims data into action, not just reporting

Many organizations track claims data but struggle to act on what it reveals. Effective claims management can include defining which indicators matter most, who is responsible for monitoring them, and what actions should follow when trends move in the wrong direction. Without clear ownership and decision paths, early warning signs often surface too late to influence outcomes.

For example, proactive retail and restaurant companies may establish a way to track a set of priority key performance indicators, such as claim frequency, lag time to report, reserve adequacy, litigation rates, and average total cost of risk by business unit, location, or claim type. The company then assigns clear threshold triggers to each metric, such as a sustained increase over several reporting periods or performance that exceeds a defined benchmark, allowing emerging issues to be flagged early rather than after losses escalate. Those triggers are tied to named owners across risk management, finance, operations, and claims, each with a defined response plan: investigate root causes, validate data quality, adjust handling strategies, implement targeted training, or introduce operational controls to address the trend. This approach can allow data management to become a disciplined decision-making process that not only identifies problems sooner but may also enable the organization to intervene quickly and redirect outcomes before they become more costly or harder to manage.

3. Re centering the human element in claims handling

As automation and AI reshape claims processes, human engagement can remain a critical differentiator — particularly for customer facing businesses. Early, empathetic communication can reduce confusion, build trust, and prevent some claimants from turning to legal representation, which could complicate the resolution process and increase costs.

Technology can help identify which claims require additional attention, but meaningful human interaction may prevent escalation.

Aligning liability management with executive decision making

Rising liability costs are no longer solely a risk management issue; they are a financial and strategic concern. Incremental severity increases, longer claim cycles, and greater litigation propensity can directly impact reserves, collateral requirements, and insurance program structures.

While no program can eliminate volatility entirely, these approaches can help organizations bend the severity curve, reduce surprises, and make more informed decisions about risk retention, insurance purchasing, and capital allocation.

As the liability landscape for restaurants, retailers, and food and beverage companies continues to evolve, managing rising costs requires ongoing attention to prevention, early intervention, and communication — not just at renewal, but throughout the claim lifecycle. By focusing on practical actions that reduce loss frequency, contain severity, and improve transparency, organizations may be able to better navigate today’s challenges and position themselves for greater resilience in the years ahead.

For more information and targeted advice on building a pre- and post-loss strategy that is most suitable for your organization, fill out the form below.

Tableware beautiful table setting in restaurant

Article

Managing rising liability costs through a robust pre- and post-loss strategy

Strengthening the pre-loss foundation

1. Replacing check the box programs with defensible risk controls

2. Using data as a leading indicator to identify risks before incidents occur

3. Treating third party and non owned exposures as core risks

Preventing manageable claims from becoming runaway costs

1. Adopting an early resolution philosophy

2. Turning claims data into action, not just reporting

3. Re centering the human element in claims handling

Aligning liability management with executive decision making

Related insights

Facing financial pressure: Practical strategies for retail and restaurant leaders

Harnessing AI to enhance retail risk management and claims efficiency

2025 Inside Employees’ Minds report in retail and hospitality

Retailer Cyber Incidents

Marsh.com Sign in

Managing rising liability costs through a robust pre- and post-loss strategy

Strengthening the pre-loss foundation

1. Replacing check the box programs with defensible risk controls

2. Using data as a leading indicator to identify risks before incidents occur

3. Treating third party and non owned exposures as core risks

Preventing manageable claims from becoming runaway costs

1. Adopting an early resolution philosophy

2. Turning claims data into action, not just reporting

3. Re centering the human element in claims handling

Aligning liability management with executive decision making

Contact us

Related insights

Facing financial pressure: Practical strategies for retail and restaurant leaders

Harnessing AI to enhance retail risk management and claims efficiency

2025 Inside Employees’ Minds report in retail and hospitality

Retailer Cyber Incidents