Liquor License Insurer Goes Mutual

A quasi state agency created 22 years ago to be the liability insurer of last resort for bars, restaurants and package stores is now a private mutual insurance company.

The Liquor Liability Joint Underwriting Association of Massachusetts, based in Westborough, became the Hospitality Mutual Insurance Co. when Lt. Gov. Tim Murray signed the legislation providing the change on June 20.

Ownership Change

Now a private firm owned by its customers, it will remain the provider of last resort for liquor liability, but customers will no longer have to be turned down three times by private insurers in order to quality. They will be able to apply to Hospitality Mutual the first time and receive insurance.

The company is regulated by the state’s Division of Insurance, as are all insurance companies operating in Massachusetts.

“In many cases, LLJUA’s policyholders have had to piece together full coverage using a number of insurers. By converting to a competitive, mutually owned company, Hospitality Mutual will offer coverage that is more efficient, more competitively priced and tailored to the needs of its policyholders,” said John W. Tympanick, president and CEO of Hospitality Mutual.

The change for LLJUA is similar to a measure taken in 1994 for medical malpractice insurance. It was then that the state’s Medical Malpractice Underwriting Association converted successfully to a private company, known as ProMutual. The new Hospitality Mutual Insurance Co. is expected be able to insure many more customers.

In the next few months, Hospitality Mutual will begin offering general liability coverage for liquor establishments, which includes coverage of slip and fall accidents and food poisoning issues that are outside liquor liability.

By expanding the types of insurance it can offer, the company expects it will need to hire additional underwriters and claim representatives, Tympanick said.

“This is a win for the establishments who are going to see better rates as a result of more competition; a win for the (insurance) agents because they will have more to offer customers and it will be a win for the state because potentially there will be more premiums paid here and more jobs,” Tympanick said.

The LLJUA was created in 1985, when a group of restaurant owners belonging to the Massachusetts Restaurant Association in Southborough pooled their money and asked the state legislature to create an entity that would insure and administer liquor liability coverage. “

They (LLJUA) have a fantastic track record over the years. Up to this point, they’ve been an insurer of last resort in many cases where liquor liability just couldn’t be bought.

"We’re very supportive of them becoming a mutual insurance company,” said Peter Christie, MRA president and CEO.

The LLJUA has issued 30,000 policies since its creation in 1985, with total premiums approaching $100 million, Tympanick said.

Hospitality Mutual will also continue to offer as much as 50 percent off its premiums for general liability assault and battery coverage to customers that have a majority of its staff complete security training from Security Liability Reduction Associates in Jamaica Plain.

Fifty percent of all claims are due to assault and battery complaints, he said, and many involve complaints by patrons against security workers or bouncers. The training includes identifying potential conflicts before they happen, how to verbally defuse conflicts and acceptable means of restraint.

State Rep. Karen E. Polito, R-Shrewsbury, one of several sponsors of last year’s bill to change the status of the group, explained that the change allowed them to expand their customer base, provide customers with additional insurance and help with a perceived stigma problem.

“We wanted to be responsive to the request from the industry, and it (the change) could help with any stigma that was attached to businesses when it was known that they were insured by a provider of last resort. This allows that stigma to be removed,” Polito said.