As you manage QSRs across multiple locations, you’re likely feeling the pressure. Traditional property insurance models are becoming increasingly inadequate for businesses like yours. Rates are climbing, coverage options are rigid and as your operations expand, so do the complexities and costs associated with insuring them.
Whether you oversee QSRs with a few sites or many across multiple states, insuring geographically dispersed properties has become a costly and inefficient endeavor. Traditional policies often require each site to be insured to its full replacement value, regardless of the actual risk profile. This approach can lead to over-insurance in low-risk areas and under-insurance in high-risk ones, resulting in inflated premiums and inefficient use of capital.
In today’s challenging market, businesses are seeking more flexible and cost-effective solutions.
The Escalating Challenge of Insuring Dispersed Properties
Commercial property insurance premiums continue to climb, extending a pattern of steady increases. In the fourth quarter of 2024, rates rose by an average of 5.6 percent, according to WTW’s Commercial Lines Insurance Pricing Survey. That upward trend has persisted into 2025. During the first quarter of this year, commercial property insurance rates increased again, climbing another 3.6 percent, according to MarketScout.
While the rate of increase has moderated compared to the historic surges seen in 2023, premiums remain firmly on an upward trajectory. Insurers continue to push rates higher as they face mounting claims from natural disasters, inflation-driven replacement costs, and reduced reinsurance capacity.
For businesses with multiple sites, these relentless increases mean budgets are stretched tighter each year. Protecting property across dozens—or hundreds—of locations is no longer just expensive. It’s becoming unsustainable through traditional insurance solutions alone.
Limitations of Traditional Insurance Models
While commercial carriers offer standardized coverage, their rigid frameworks rarely align with the realities of running a multi-site business. Policies are often written to treat every location the same, overlooking the nuances of your operations. As a result, your insurance program may be loaded with inefficiencies—from paying for limits you don’t need in low-risk areas to dealing with exclusions and gaps that leave you unexpectedly exposed elsewhere.
Inflexibility is the root of the problem. Without the ability to design coverage around your actual risk, you’re left with a blunt instrument that may protect your assets on paper but strains your budget and leaves little room for optimization.
Moreover, many businesses have not adjusted their policy limits to reflect the increased costs of replacing insured property. Only 43 percent of business owners have increased their policy limits to accurately reflect current replacement costs, leading to potential underinsurance issues.
Captive Insurance: A Strategic Alternative
Captive insurance offers a tailored approach, allowing hospitality businesses to customize coverage based on specific risk assessments. This model enables companies to allocate resources more efficiently, potentially leading to cost savings and better risk management.
With a captive, you can design your property program to reflect your actual risk. Instead of buying rigid, location-specific coverage, you can spread coverage limits across your portfolio—putting more where you need it, and less where you don’t. This flexibility reduces excess coverage, lowers overall costs, and allows businesses to retain underwriting profits that would otherwise go to commercial carriers.
Peanut Butter Coverage: A Smarter Way to Spread Protection
This is where captive insurance changes the game.
With a captive, you can design your property program to reflect your actual risk. Instead of buying rigid, location-specific coverage, you can spread coverage limits across your portfolio—putting more where you need it, and less where you don’t.
It’s what many in the industry call “peanut butter coverage”—a way to spread insurance protection evenly but strategically. You create a pool of coverage that applies across all sites, ensuring that if one or two face losses, you’re fully protected, without paying to insure every site to the maximum.
That flexibility delivers major advantages:
- Cost efficiency. You buy what you truly need, not what commercial carriers dictate.
- Better alignment with risk. Coverage matches the realities of your exposure, not hypothetical scenarios.
- Control and customization. You’re in charge of designing the coverage, limits, and triggers.
Real-World Example: How a Business Transformed Its Property Insurance
A multi-generational family-owned enterprise spanning hospitality and other industries, faced complexities in managing numerous insurance policies across various carriers. By working with a captive insurance management company, they consolidated their insurance structure, streamlined administration, and designed a unique property program that allowed them to retain profits previously allocated to third-party carriers. This strategic move not only addressed coverage gaps but also aligned with their operational needs, showcasing the practical benefits of a captive insurance model.
A Captive Approach is No Longer a Niche Idea
As property rates continue to rise and the traditional insurance market remains volatile, captives are no longer just for Fortune 500 companies.
If your QSR business has multiple small or mid-sized locations and faces mounting insurance costs, you may be an ideal candidate. Captives empower you to rethink how property coverage should work—offering flexibility where rigid, per-location commercial policies cannot.
At a time when every dollar matters, and risk continues to evolve, this approach allows you to better control both your costs and your coverage.
If you’re still relying on conventional property insurance to protect a complex, multi-site portfolio, it may be time to reconsider. Spreading protection more intelligently—just like spreading peanut butter where it’s needed—could be the smartest and most strategic move you make for your business this year.
Randy Sadler started his career in risk management as an officer in the U.S. Army, where he was responsible for the training and safety of hundreds of soldiers and over 150 wheeled and tracked vehicles. He graduated from the U.S. Military Academy at West Point with a B.S. degree in International and Strategic History with a focus on U.S.–China relations in the 20th century. He has been a principal with CIC Services, LLC for seven years. In this role, he consults directly with business owners, CEOs, and CFOs on the formation of captive insurance programs for their businesses. CIC Services manages more than 100 captives.
