(Note: This story appears in the September 2021 issue of ED Magazine)
Pure Risk Advisors’ John Jacquat isn’t here to upsell you. Instead, he’s focused on making sure your insurance is doing what it’s supposed to do. Specifically, protecting your club, its staff and patrons.
Knowledgeable. Responsive. Trustworthy. Sound like ideal qualities in a partner? John Jacquat thinks so.
Only, he’s not talking romance, he’s talking risk. Specifically, the risks you as a club owner/operator are responsible for when it comes to your insurance.
Jacquat, founder of Pure Risk Advisors, hates being sold to, and conversely doesn’t push prospective clients to sign with him.
“When I use the word advisor — another word would be partner, in terms of working with them on their insurance — I’m going to come in and I would like to review their policies,” Jacquat says. “I would like to discuss with them what they want, their goals for the policies, identify issues, and then, of course, try to save them money. Where I take the advisor position further is if things are in great shape and I can’t do better on pricing or anything else, that’s the advice I give them. It’s not a sales approach.
“I’m really just trying to help people solve problems, educate them on questions they might have,” he adds. “Then, hopefully, become a partner in insurance.”
ED Magazine spoke with Jacquat from his Erie, Colorado office about his earnest approach as an insurance advisor, the common mistakes he sees after 15-plus years working within the gentlemen’s club sector, and how to rectify those mistakes that can result in soaring premiums.
ED: Could you talk a bit about the history of your company and how you started working with the gentleman’s club industry?
JACQUAT: I have been doing work with gentleman’s clubs for more than 15 years. The first four years, I was with a top- 10, large broker. I started Pure Risk Advisors in 2009. When I was working on my first larger club chain, I noticed there were major coverage gaps I thought could be fixed. And we were able to do that. As I continue reviewing people’s policies, I still find coverage gaps that are there, ones that can be fixed. Or at least, ones that should be identified to the club owner so they understand what they have. It’s getting to be an advisor and trying to problem-solve a bit.
ED: What kind of gaps were you seeing? How do you advise clients, or prospective clients, to fill them in?
JACQUAT: A lot of this comes into the general liability policy. For example, we feel that lower liquor liability limits are a big exposure and (you) should carry as high a limit as you can afford business-wise. You can also find exclusions for firearms; you can find exclusions for weapons; you can have assault and battery exclusions or sub limits; you could have exclusions for injury to independent contractors on your general liability.
It’s about asking and finding the carriers that understand the industry, which has been constantly changing over the last 15 years. The carriers kind of come and go and come back again. If you know the carriers that will not include some of those (potentially harmful) exclusions and are willing to provide coverage for assault and battery, liquor liability, etc., the insured just comes up better protected.
ED: In the aforementioned 15 years, have you noticed more gaps in coverage or the same gaps to a greater, costlier degree?
JACQUAT: When I work with a client, I try to get them those coverages all the time. The market is just so limited on the carriers that will provide those limits the way I would recommend them.
ED: Is that market limitation you referenced due to the stigma of the industry or something more technical?
JACQUAT: There’s a stigma in the industry, for sure. But we’re seeing a lot of claims when it comes to liquor claims, assault and battery claims, so that even if you can get a carrier to get over the fact they’re gentleman’s clubs and they come in and they write them for a little while, if they’re seeing a lot of big claims, they don’t want to keep writing them. Whereas another insurance person might come in that doesn’t write a lot of gentleman’s clubs and might say ‘This is going to be no problem. You’re paying X in premium. I’m sure there’s a lot of carriers that will do it.’ In the end, there aren’t, and the claims are a big factor in that.
“The educational piece is important, and I know some people do not want to get involved in it and they say, ‘Give me something that protects me and make it as cheap as possible.’ If that’s how it starts, I still try to educate them on how this works because then they understand what they’re getting for the price they’re paying.” — John Jacquat
ED: How important is it to you to be a guide versus a salesman, especially when it comes to insurance where a lot of people can get lost?
JACQUAT: The relationship has to be built on trust, and the trust comes from being knowledgeable and responsive to their questions. I always try to educate club owners/operators on their insurance policy, what it covers, what it doesn’t, what it’s there for. The educational piece is important, and I know some people do not want to get involved in it and they say, “Give me something that protects me and make it as cheap as possible.” If that’s how it starts, I still try to educate them on how this works because then they understand what they’re getting for the price they’re paying.
ED: How does the ongoing dynamic of dancers being classified as employees or independent contractors affect what type of insurance clubs are eligible for? How does the classification affect workers comp?
JACQUAT: It varies state by state. Workers’ compensation is a state-mandated and state-ruled-on coverage. Classification also limits the carriers interested in writing workers’ comp because there’s some uncertainty of when the premiums are paid based on the payroll of the employees. Somebody comes in and says all those independent contractors should be employees, or there’s a claim on one of those independent contractors and that workers’ comp gets brought up, that makes those carriers nervous.
Some states already mandate that staff need to be employees; in other states, independent contractors are not included in the workers’ compensation. That is where they could possibly have coverage for any negligence on the general liability. If you don’t have that injury to independent contractors exclusion on your general liability, it does limit the markets for workers’ compensation as well.
ED: Is there any type of coverage that club owners/ operators may not be aware of that they should be taking advantage of?
JACQUAT: It’s dependent on how they’re running their business now. There’s employment practices liability that would potentially cover a wage-and-hour claim, but for this industry, it’s cost prohibitive to purchase because of all the issues going on. We actually have an exclusive workers’ comp program with one carrier out of North Carolina, and they are aware of the issues, tracking it by state. They will write clubs with entertainers as employees but if they are not employees, they will also recommend excluding them from coverage as independent contractors. It can be a real cost saver if a club qualifies.
ED: What’s the biggest liability gentlemen’s clubs face from the perspective of insurance underwriters?
JACQUAT: It’s the claims of dramshop, which is another word for liquor liability. Different states have different laws in terms of the responsibility of the establishment, but a lot of states are seeing very large claims when somebody is overserved and drives and hurts themselves or drives and hurts another party. You’re seeing claims of $1 million, $2 million — that’s a huge impact on the carrier and their interest in continuing to write the industry.
The second biggest exposure I see for the clubs is assault and battery. You don’t always see those huge payouts, but if somebody is mishandled at the club, they fall down and hit their head, you can absolutely see some huge claims resulting from assault and battery.
ED: What steps can clubs take to reduce policy costs and make sure they’re equipped to get the best deal possible, especially when it comes to aforementioned dramshop and assault and battery claims?
JACQUAT: The first thing I talk about at ACE (Association of Club Executives) meetings or with clients is establishing a culture throughout the organization to be cognizant of how they’re handling training when it comes to over-serving. A lot of clubs will do it as required every two to three years, depending on the program they use. It’s the same with assault and battery. You want a culture of training in an effort to reduce physical altercations: how you get somebody calmed down, out the door and keep everybody, employees and patrons, safe as best you can. That culture is not the “bouncer” culture, it’s a culture of courtesy and looking to diffuse the situation without escalating the situation.
Something else to consider with assault and battery is a lot of club owners will hire
a third-party security vendor for the door or for the parking lot — that’s certainly not a bad way to help with some of the risk, but in order to do that properly, that third-party vendor has to be vetted. We need to check their insurance policy and have them list
our club owner as additional insured. A lot of times you can find these policies in place for the security guard companies that may exclude coverage for all liquor license establishments. You basically have an insurance company that’s not going to provide coverage for the vendor at your place, or their policy might have a very, very low assault and battery sub limit or an exclusion. When you’re hiring a company to come in and do their job at providing security for your parking lot or entryway, we have to really analyze their insurance policy to make sure there’s risk transfer available. Otherwise, it’s all going to come right back to your policy 100%. The security company doesn’t like when you point that out because their premium is probably going to have to go up in order to do the work.
The first thing I talk about with clients when discussing risk mitigation is establishing a culture throughout the organization to be cognizant of how they’re handling training when it comes to over-serving. It’s the same with assault and battery. You want a culture of training in an effort to reduce physical altercations: how you get somebody calmed down, out the door and keep everybody, employees and patrons, safe as best you can. — John Jacquat
ED: What kinds of coverages do you specialize in providing?
JACQUAT: We provide all the insurance needed at a club from general liability, liquor, excess liability, auto, commercial property, workers’ compensation, of course. There also have been over the years, and still continue, unauthorized uses of an image [a topic covered at the EXPO 2021 Legal Panel—Ed]. We provide a coverage for that under a cyber liability policy that has a limit for media liability. That coverage is generally not overly expensive and would protect clubs against somebody at their organization pulling an image (off of the internet), even though the company policy is to not do that, and to use it in their electronic marketing. We’ve seen claims against clubs of all sizes where you think they’ve got a marketing firm doing the work and the marketing firm still doesn’t do it correctly.
ED: How has COVID affected policies for gentlemen’s clubs? Are there signs of the pandemic affecting policies/coverage in the future (i.e. virus clauses)?
JACQUAT: A lot of carriers, if they didn’t have it before, have added a communicable disease exclusion under the liability that is not specific to clubs, that’s across the insurance industry. Workers’ compensation really didn’t see a lot of claims get paid out for COVID, so that hasn’t been super affected by it. There’s a question of where did you get (the disease) and show me how that happened. Is it more like getting sick with the flu from somebody at work? That’s generally not a covered injury when it comes to workers’ compensation. It’s an ongoing discussion with a seasonal business or a business coming out of COVID — what are the sales estimates. On the workers’ compensation, the company our program is with provides a pay-as-you-go opportunity where you pay the premium based on your payroll for that past month or that past two weeks. That helps with cash flow because you’re paying for what you’re using versus an estimate.
ED: You’ve been involved with the gentlemen’s club industry for a while now. Can you talk about that continued EXPO/industry support you’ve shown and what it says about your belief in the industry itself?
JACQUAT: The best way to talk about it is to talk about Miami (site of the 2021 Gentlemen’s Club EXPO), which was such a nice time to have the industry come together. I have relationships that when I see (club operators) and they see me, we’re happy to see each other, this year more than ever. It’s important to have those conversations about what is available to club owners and how we do our business.