Last year saw the launch of BMS Bacchus – a stock throughput solution designed by BMS Group to protect wine across all the stages of its product, storage and transit. Backed by 19 carriers, the product has been created with a clear ambition in mind, according to Louise Rothschild, director of cargo and stock throughput at BMS – to purposefully insulate wine producer clients from future market shocks.
In conversation with Insurance Business, Rothschild noted that she has supported the wine producing industry for a vast chunk of her career – and so, has seen the market through some incredibly tough conditions. She joined a specialist brokerage when the firm had just won a few California wineries, she said, and she relished the opportunity to help build out its book and connect with a great industry.
Then, in 2017, devastating wildfires hit the Napa and Sonoma Valleys, with the same happening again in 2018 and then again in 2020, when the region was hit by a major flood. “This book that had been a bit of a unicorn in that it didn’t tend to have much attritional day-to-day-type loss was suddenly a pariah,” she said. “And our market literally fled from this particular industry sector. It was a really difficult time, we had a lot of capacity leaving and we found ourselves unable to insure most clients, which was a horrible position to be in.”
The wine producing industry is close-knit, she said, and many of its insureds had their family names above the doors of their wineries, which made having those conversations especially difficult.
“We all work in a market, and market forces ultimately dictate the products that are available, and the pricing and the terms,” she said. “But brokers contribute to that and help drive that. And what we had prior to 2020 was an extremely cheap insurance product for wine, possibly too cheap. So, when Northern California started having regular wildfires, that sort of catastrophe exposure simply wasn't priced into what we had been charging these wineries up to that point.”
When the pandemic struck in 2020, Rothschild went on maternity leave and after a brief return spell left her then role before joining BMS – from which Bacchus was born. When she re-joined the industry some 18 months ago, she said she was very surprised by the ways in which wineries had taken the initiative to proactively manage and mitigate their wildfire risks – without being forced to do so by insurers, as many are uninsured.
“I was really impressed,” she said. “This whole industry of wildfire servicing had sprung up with people offering modelling services and analytics, and mitigation and practical advice. And it seemed that the insurance market was still doing things the same way. There have been some attempts to draw together some products that incorporated these risk management aspects, but it wasn't widespread and it wasn't formalised.”
When she returned to the marketplace having completed her non-compete, it was with a blank sheet of paper as she wasn’t working from a book of clients. What she had was time, Rothschild said, and she spent that time researching third party providers of these various services, and speaking to wineries to find out about their risk management profiles.
Where BMS has been able to really differentiate itself is due to the power of its in-house analytics team, she said, which includes an in-house meteorologist who specialises in wildfire. By connecting with the right people, she was able to tap into the software and services BMS provides and start joining the dots of what an innovative solution for wineries might look like.
It has been fascinating piecing that solution together, she said, particularly given the vast swathe of risks insureds in the market face – not just wildfire but flood, earthquake, operational risks such as contaminants or leakages due to tank/storage failures, as well as cargo and transit risks. Building out Bacchus has been an inherently personal endeavour for Rothschild as she believes strongly in the role of the broker in creating innovative solutions, and the role of insurance in creating a healthy and sustainable pricing cycle to make sure the needs of clients are met.
Looking ahead, she said a great first year for Bacchus will see it build a strong client base and using the feedback of that base, combined with the right data, analytics and mitigation solutions, to make a difference to their day-to-day operations. It’s all about getting the right equilibrium between risk and contribution to the pool, she said, and part of that means paying claims because, while you’d never wish for anyone to have a claim, it is how you earn proof of concept in the insurance industry.
“We have had incredible buy-in from the market as well,” she said. “We've got 19 carriers sitting behind this product, so, from an insurance perspective, it's really well diversified. We're not overly reliant on any particular carrier to provide it, and I've done that on purpose… to insulate us from future market shocks, because I never want to be in the position again where I have to be calling people and telling them that we simply do not have a solution for them. That was not OK.”
