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The Risks of Dining Out and How Insurance Can Help
Eating out may be less work, but that doesn’t mean there is less risk, according to a new report from the Center for Science in the Public Interest (CSPI), which finds that Americans are more than twice as likely to get sick from a foodborne illness or contamination from dining out than they are eating at home.
The report found that 1,610 outbreaks in restaurants sickened more than 28,000 people over a 10-year period. Private homes caused nearly 13,000 cases of foodborne illness from 893 outbreaks. To be classified as an outbreak, clusters of two or more illnesses must result from the same contaminated food source.
The Washington, D.C.-based nonprofit food safety watchdog group compiled the information by analyzing 10,409 “solved” foodborne disease outbreaks reported to the Center for Disease Control (CDC) between 2002 and 2011. An outbreak is considered “solved” when both the contaminated food and the pathogen have been identified.
The report found that produce was the top category for outbreaks with 667, or 17 percent of total outbreaks, and 23,748 illnesses. Produce, seafood poultry and beef were the causes of the most solved foodborne illnesses in the past decade.
Sarah Klein, senior staff attorney of the CSPI’s Food Safety Program, says the organization felt the significant number of outbreaks from restaurants was important for consumers to know.
“It has been clear to us for some time that restaurants do pose an unusually high risk of foodborne illness but this was the first year that we chose to make this a key finding from our outbreak database,” says Klein. “You aren’t just more likely to get sick from a restaurant than at home but you are twice as likely.”
And while states reported 42 percent fewer outbreaks to the CDC in 2011 compared with 2002, Klein says that it is important to note that is not actually because there were fewer outbreaks that occurred but because fewer outbreaks are being reported overall. This makes it difficult to identify and solve outbreaks and provide the most accurate information to consumers.
Klein says fiscal issues facing the state agencies that gather and analyze this data have hampered data collection.
“There is a lot of data that nobody knows about because no one has this data, not even the federal government. It is dispersed among the states and among people who choose not to disclose their illness,” says Klein. “It is possible that if we knew about all of these unsolved outbreaks the numbers would look very different. Of all those millions of unknown cases the great majority of those could be coming from private homes or prisons, or anywhere but restaurants. But it is equally conceivable they are coming restaurants.”
Managing Restaurant Risk
Insurance can play an important role in helping restaurants keep the outbreak numbers down, says Klein.
“The insurance industry can push restaurants to prioritize food safety as a condition of coverage or have insurance rates tied to inspection results, for example,” she says.
Heidi Strommen, president of ProHost USA in Minneapolis, says the program administrator already has employed these tactics – which is why claims for foodborne illness have been low in the 25 years ProHost has been writing this class. It targets family and fine-dining restaurants and just recently selected XL as its new carrier.
Strommen says they have never had a large claim related to a food contamination incident at one of their restaurants. She attributes this to the restaurants they target using best-practice strategies such as employing highly-trained individuals and chefs, proper food handling and storage.
“We sometimes see an individual claim where a customer says it was caused by something they ate at a restaurant but unless they went to a medical facility and had it confirmed that [their illness] was from the restaurant, they are not compensated under our program,” says Strommen.
Strommen says in most cases, unless a person is violently ill or has a lingering illness they do not obtain medical treatment, which could also be a reason for the underreporting.
Risk management, Strommen agrees, is important in preventing foodborne illness. ProHost asks for health department grades and history on its applications and uses this information as an indicator of how a restaurant operates.
“For new clients, if they haven’t passed inspections, we would just decline in 99 percent of cases unless there is a good explanation for the failure,” says Strommen. “For current clients, it is harder to keep on top of that information but we do our best to keep up and at renewal time we will try to find out. If it comes to our attention it would result in higher rates or a nonrenewal, especially if there was a claim.”
ProHost also looks at a restaurant’s supply sources and staff experience – namely the chefs and their training.
“We want an experienced chef running the kitchen. If you have someone who isn’t well-trained and doesn’t understand issues with food prep and food safety, you could have problems,” says Strommen.
Strommen says ProHost also employs loss control experts who go out and meet with restaurant managers on every piece of new business and every so often after that. “They can certainly provide information if they see anything that looks like it could be problematic and pass that information on to the manager,” she says.
Typically, a restaurant that is committed to food safety is one that is also effective at working with its insurer and restaurant associations to help manage exposures, says Strommen.
ProHost offers a package program for restaurants that includes property, general liability, liquor liability, equipment breakdown and crime. There is also the option to purchase a coverage for foodborne illness and contamination that has two components. The first is liability coverage that includes expenses related to medical treatment for if there is an outbreak and it is traced back to the restaurant. The second is business interruption coverage if a restaurant has to be closed because of suspicion or confirmation of food contamination.
The coverage includes loss of income and expenses related to clean up, replacement of contaminated food and medical tests of employees if they aren’t covered by workers’ compensation. It also covers additional advertising expenses a restaurant might incur to restore its reputation.
Strommen says despite the devastating effects an outbreak can have to a business and all of the benefits food contamination coverage provides, many restaurants go without it. She says agents and brokers should use the coverage as a selling tool when working on new business.
“A lot of restaurants think in terms of liability and not the property exposures so it is important to go over with the business owner what would happen if their restaurant gets closed down for a week or a few days? Many owners don’t think through that part of it,” she says.