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Brand or insurance protection – worrying developments in food retail

01 November 2019
In the Food and Hospitality sectors, we are starting to see a change in the type of claims that are made, and the ways in which our clients want to see these claims dealt with.

When we think about accidents in restaurants, as Defendant Claims Handlers, we typically know what to expect. We are all too familiar with reports of customers or employees slipping as a result of a spillage, or allegations of food poisoning after a meal.  As digital converges with bricks and mortar as well as a growing diverse population, we are starting to see a change in both the sort of claims that are starting to be made, as well as the ways in which our clients want to see these claims dealt with.

So what do we mean by this? In most accidents the injury is very physical in nature, a broken bone, or a sprained ankle. But what about customers who are of a certain religious denomination and cannot consume certain meats like beef or pork, and are accidentally served meals containing these ingredients? 

In a situation like this, where the injuries are more psychological in nature, we would investigate the matter the same as any other; has a breach of the duty of care occurred? And, can causation be established? 

That is not to say that the conventional slip and trip cases are a thing of the past, and in most circumstances, the Food Business Operator (FBO) will want to defend these matters wherever they can. However, we are seeing a significant rise in FBOs looking to resolve the matter directly with the Claimant, often as an extension of good customer service. 

Interestingly, the reason for this is often less about the commercial balance between the cost to settle and the cost and uncertainty of defending litigated claims, but more about the indirect cost of the reputational damage of adverse reviews on social media or review sites. This is of course a legitimate concern and it is natural for any business to want to protect its brand, however, an unintended consequence of this can be that it sets a precedent where possibly spurious claims go un- challenged and allows low level dubious claims or even fraud to grow unfettered.  

This leads to a more prosaic problem. In this conflict between brand protection and insurance indemnity who will prevail? Who should prevail?

  1. Will brand protection on social media continue to be a priority even in the face of spurious claims?
  2. Will Insureds continue to prefer to fund compensation out of their own pockets when they have perfectly good indemnity cover and legal advice available to allow them to pay nothing at all?
  3. Will this only serve to open the floodgates making social media focused brands fair game for compensation hungry carpetbaggers or as some commentary on a US class action for sugary products put it: 'a lawyer led shake down'?
  4. When will Insurers lose patience and seek to enforce the terms of their policies?

We, together with our specialist products liability and regulatory lawyers, are here to support our FBOs through these muddied waters. We must guide them through this changing environment and seek to uphold the values of law and evidence, and strike the right balance between brand protection and commercial expediency.  

Learn more about our claims experience for the food and hospitality sector

Learn more about our products liability and regulatory experience in the food and hospitality sector