When Restaurant Growth Outpaces the Insurance Market
As restaurant systems expand, operators uncover a truth often overlooked: risk scales with growth. Multi-unit restaurants reach a stage where operational complexity intensifies faster than the systems built to manage it. Events that were previously labeled catastrophic now occur with regularity, exposing a growing gap between how companies experience risk and how traditional insurance is designed to respond.
In a recent article published by QSR, Tim Welles of CIC Services explains how, for decades, insurance strategies were built around infrequent, physical losses. Today, the most disruptive events are often operational in nature and repeat far more predictably than legacy models anticipated. As companies scale, this disconnect becomes harder to ignore.
Insurers have taken notice, but this is not a temporary hard market. Reinsurers are recalibrating decades of actuarial assumptions after sustained loss pressure. Those adjustments flow downstream as higher premiums, reduced limits, and narrower terms for policyholders. The result is not simply more expensive insurance, but coverage that often responds to fewer real-world losses.
At the same time, many of today’s most costly disruptions do not involve obvious physical damage. Power failures stall production. Port closures freeze inventory. Smoke from distant wildfires shuts down facilities without harming property. Traditional insurance triggers struggle to capture these scenarios, even though their financial impact can be severe.
Operational interruptions compound when multiple sites are affected simultaneously. Supply chain dependencies magnify delays and shortages. Technology outages ripple across revenue, workforce allocation, and customer relationships. These events are not rare, but they frequently fall below deductibles or into exclusions.
Many companies reach a point where insurance spend increases year after year, yet fewer losses are actually transferred. Premiums rise as exposure grows, but recurring operational and non-physical losses remain largely self-insured by default.
This is often when leadership recognizes that their risk profile has matured beyond what standard market solutions were built to handle. The issue is not that insurance is failing. It is that it was never designed to efficiently absorb high-frequency, low-severity losses that repeat with scale.
In response, some organizations reassess how risk is financed rather than simply how much insurance is purchased. Advanced risk-financing tools, including captive insurance companies, allow businesses to formally insure their own predictable risks within a regulated structure.
When designed correctly, captives use actuarial data drawn from the organization’s own loss history, pay claims like a traditional insurer, and retain underwriting profit during favorable years. They can be particularly effective for risks that commercial markets price inconsistently or exclude altogether.
Read the full article here to understand how recurring operational disruptions are changing the risk profile of restaurant systems and why forward-looking operators are rethinking how risk is financed.