Britain’s pubs are closing at the rate of one a day, according to new figures from the British Beer and Pub Association (BBPA). The contraction is expected to claim 378 sites this year and more than 5,600 jobs. But while the headlines point to decline, insurance brokers say the reality is more complex - and in some cases, the turbulence is creating opportunities.
Closures inevitably raise concerns for insurers and their intermediaries, with questions over underwriting appetite, premium levels and the sustainability of clients in hospitality. Yet, as Verlingue’s Neal Lumb observes, the sector’s ability to reinvent itself has long underpinned its resilience.
Pub operators report relentless pressure on margins from higher wages, increased National Insurance contributions and business rates. UKHospitality estimates that 89,000 jobs have been lost across the hospitality sector since last autumn’s Budget - more than half of all redundancies nationwide over that period.
In London, managers are facing annual increases of tens of thousands of pounds just to keep trading at current levels. Tim Skinner, of the Devonshire Arms near Bond Street, told CNBC that higher overheads have forced him to pass costs on, with the average pint now exceeding £5.
For brokers and insurers, those rising costs translate into heightened financial vulnerability - with weaker operators at greater risk of failure, and claims arising from closures or distressed businesses becoming more likely.
The BBPA has warned of wider economic consequences. “From grain to glass, our sector supports over £30 billion being pushed into the economy, £18 billion in taxes, one million jobs,” said spokesman Charlie Hall. Losses at the pub level feed into every stage of the chain, affecting farmers, brewers, and manufacturers alike.
This ripple effect matters for the insurance sector too, with knock-on exposures across employers’ liability, property, business interruption and supply chain covers.
Yet Neal Lumb, Sales and Marketing Director at Verlingue, cautions against seeing the trend as simple decline.
“Hospitality is like most sectors that we deal with. It’s always up and down. As soon as something gets newsworthy, it’s a massive issue. They’re all closing down – and in certain places that would definitely be the case. What they don’t report on is that, for example, in Manchester about 12 new places opened last year. In Brighton, where I am, it’s booming,” he said.
For insurers, that dynamism means there is still opportunity. “Do you get lots of village pubs closing? You definitely do. But what opens in their place? New gastropubs, Vietnamese street food, high-end restaurants. People are always saying it’s on its knees, but it never is. It just changes,” Lumb said.
That churn feeds directly into the insurance cycle. Lumb notes that underwriting appetite shifts regularly, with carriers entering and exiting the sector - but capacity never disappearing altogether. Stronger risks, with sound financials and positive risk features such as robust kitchen safety systems, continue to attract competitive cover. Conversely, sites with poor performance or inadequate risk management may face higher premiums or difficulty securing terms.
This divergence underscores the importance of brokers’ role in guiding clients towards sustainable practices and helping them secure the right protection in a volatile market.
Industry leaders continue to call for government action on business rates and beer duty. Without it, operators warn, closures will accelerate. Yet, for all the boarded-up sites, the sector’s capacity for reinvention remains.
As Lumb observes, hospitality has weathered downturns before. For insurers and brokers, the challenge lies not in retreating from the sector, but in discerning which businesses can adapt - and ensuring those operators are supported with the cover they need to thrive.
