For almost eight years now, South Carolina bars, restaurants and music venues have faced a sobering situation brought on by a 2018 state law that requires at least $1 million in liquor liability coverage: Pay unaffordable premiums or shut their doors altogether.
Multiple establishments, including some favorite watering holes and concert arenas across the state, have chosen the latter route and have closed down permanently.
An investment manager-turned-insurance executive and a group of like-minded people in the hospitality industry believe they’ve finally come up with at least a partial solution: A captive insurance company that can provide coverage at one-third to one-half of the price that traditional insurance companies have offered for the state-mandated coverage.
“State lawmakers didn’t want to do anything, so we took things into our own hands,” said Christopher Smith, executive director of the South Carolina Bar & Tavern Association.
The association is led in part by Andrew Reina, a former New Yorker and now a Charleston wealth manager who decided to launch Ragnar Hospitality Insurance two years ago. He believes the captive approach, authorized by 2025 state legislation, can fill the gap and provide affordable liability insurance by doing something most insurance carriers don’t—intense, hands-on vetting of establishments, partly through surprise inspections and secret-shopper visits to prospective clients.
The idea is to see if bar and restaurant owners are telling the truth about their liquor-selling practices, underage-drinking enforcement, hours of operation and more.
“Most insurance companies look only at the total alcohol sales,” Reina told Insurance Journal. “If it’s less than 50% of total sales, they’ll think about writing it. But that’s a completely inaccurate way to measure the risk.”
A better approach, Reina said, is to look at other factors, including the amount of alcohol sold per patron.
Reina estimates that one third of all establishment proprietors that he has run across tend to lie on their insurance applications. One recent applicant indicated that in recent years, he had obtained dram shop coverage through a Berkshire Hathaway subsidiary. And, by the way, the bar has “armed security,” the owner said on the application, perhaps hoping that would qualify his place for a premium discount.
“I know they lied about that,” Reina said. Because few, if any insurers will even think about writing a place that mixes firearms with alcohol sales. Reina’s group also decided to take a pass on writing the establishment.
In another recent example, Reina said he drove two hours one night—unannounced—to check out an applicant’s bar in upstate South Carolina. He sat at the bar, had a beer, then heard a young man next to him order 10 “jello shots” for a dollar each. Reina knew that the bar’s insurance policy carried an exclusion that barred coverage if drinks are sold at such low prices.
