By Seth Tarboro, EHD Select Producer
Picture this – the date: December 23rd, the time: 7am. Your phone rings — a frantic insured is on the other end explaining how his workshop is an absolute mess. See, one of his reindeer got loose and caused thousands of dollars’ worth of damage to inventory set to be delivered within the next forty-eight hours. Not to mention the damage to the facility itself and the elves-er…employees injured on the job. You’re halfway through explaining how damage and injuries caused by his own animals may not be a coverable loss — when he asks if the carrier has him on any kind of “naughty list”.
I know what you’re thinking. Something about this scenario feels a bit too– fantastical, but I assure you– carriers really don’t have a “naughty list”. Not that I could tell you if they did…
Coal for Christmas
Jingles and jokes aside, the holiday season is an important time for small businesses to make sure they have the right coverages in place. Similar to the temperature at the dinner table rising when that one uncle starts talking politics after a few too many shots of coquito, the risk factors for retail stores and even online vendors skyrocket at this time of year.
Retailers need to be focused on security and indemnity all year round, but this is especially true during the holidays. Recent data from the Council on Criminal Justice reveals trends of shoplifting incidents spiking by 40% during December alone. While stores may not have the time to check their inventory against the amount of coverage they have as often as they’d like, pre-Christmas rush could be the right time to make sure this gets done. It’s equally important to check that they are covered for all possible causes of loss as some policies exclude coverage for things like theft or vandalism. This, however, is only half of the solution. Retailers are also stepping up their efforts in terms of security to help with loss prevention. This includes measures such as upgrading from static to dynamic cameras to solve blind spot issues. Acquiring license plate readers to aid law enforcement and locking cases to safeguard high value items as well as changing the store layout to thwart bad actors.
Petty shoplifting, unfortunately, is not the only type of crime seeing an increase for retail stores as ORC (organized retail crime) groups are diversifying their criminal portfolios and attacking vulnerabilities across the entire retail ecosystem. According to the National Retail Federation, more than half of retailers surveyed reported increases in phone scams, digital fraud and cargo or supply chain thefts with dramatic spikes in Q4. Not only do retailers need to be sure they have the proper coverage and security at their brick and mortar, but also while their inventory is in transit.
What about online vendors? They’re at just as much risk. Online transactions surge during the holidays and cybercriminals are well aware of that fact. Small businesses again are the prime targets as they can often lack robust cybersecurity. Clever phishing tactics such as holiday-themed emails targeting employees with order updates and shipping notices have a high success rate due to a lowered mindfulness because of the pressures of the season. Retailers also must be wary of the cyber practices of their third-party partners as payment processors, e-commerce platforms and even inventory apps can be attack vectors for cybercrimes. The smartest retail brands are not only carrying a comprehensive cyber insurance policy of which they are familiar with its strengths and vulnerabilities, but also have a plan in place with a team specifically selected to combat this type of breach. Most importantly, regular conversations are happening within the organization about year-round focus on cyber safety and elevated attention during this time of year when website traffic is at an all-time high. This kind of effort is what prevents the season that should be the peak of profitability from becoming a valley due to a cyber loss.
It’s Turbo Time!
The increase in organized retail crime is a major problem, but not the only one these businesses need to plan for during the busy holiday season. Many industry sources and lawyers report that the holidays tend to bring elevated risk for liability claims as well. I like most people enjoy a Bing Crosby style white Christmas, but unpredictable weather can lead to snow, and ice tracked into stores and wet entryways.
It’s not only the natural factors that add to the risk, but also the human-caused ones. Christmas time means extra décor and excess holiday themed displays jutting into walkways. It means hurried shoppers, seasonal employees and overcrowded aisles. It means stressed out staff, working long days and longer nights. I know, I know – Bah Humbug! I promise, I’m no Scrooge and although I’ve been working on my Jim Carrey impersonation for decades, I’m no Grinch either. I love Christmas too! I’m not trying to take the jingle out of your bells but I am an insurance man, so risk is always on the brain, and I’ve seen Jingle All The Way enough times to know that Arnold Schwarzenegger doesn’t go all bull in a China shop looking for a Turbo Man doll without some pretty hefty claim payouts.
This is where planning and preparation come into play. First, we make sure our liability and workers compensation policies hold adequate limits with an umbrella for good measure. That way if a slip and fall does occur, the injured individual is protected as is our small business. Next, see that our year-round and seasonal staff are well trained and prepared for the uptick in traffic. Peak focus and alertness are necessary to keep the location well maintained of possible hazards, be it slippery floors or plastic candy canes acting as unintentional speed bumps that could cause a pile up in the decoration aisle. Finally, we have our trusted insurance advisor with an eye for spotting risk exposures (and a pretty good Jim Carrey impersonation), do a walk through and point out anything we might have missed, because that’s part of the reason we trust them.
CONCLUSION
The fact is that for many small businesses such as bakeries, restaurants, gift shops and toy stores (the few that remain), December revenue can account for 20-40% of their annual income. A major loss during this time or even having business interrupted for a few days due to power outages, frozen pipes leading to water damage or supply chain delays can be devastating. It’s why Business Interruption coverage is equally as critical to a small business as any of the other coverages mentioned previously. This is also the season of temporary retail like holiday markets, gift kiosks and tree lots. These businesses appear quickly and disappear just as fast, but their risks are very real.
For the insurance professionals, be sure to check in with your retail clients during this time of year, they need your expertise even if they haven’t asked yet. For the small business owners, if you haven’t run through these checklists, now is the time. Finally, for anyone who bet I would wedge more than 3 movie references into this blog, I believe Vegas set the over/under at 2.5, so you’re in the money! For those who bet the under, better luck in 2026! Merry Christmas and Happy New Year!
