How is the winery insurance market performing?

Wineries are proving to be resilient amid some challenges

How is the winery insurance market performing?


By David Saric

While certain geographies are experiencing a tightening of P&C capacity, especially in California, wineries in the region are feeling the sting more than most due to extreme weather events.

“In the classic Sonoma Napa Valley wine country, if we had a winery exposure on the valley floor, we can get insurance and procurement that is reasonable and not too expensive,” said Mike Ryan (pictured left), practice leader of the North Bay business unit of InterWest, which has a Wine Industry Focus Group. “Unfortunately, a lot of these vineyards are on top of the mountains, and that’s where wildfire risk really is, which drives property premiums.”

Property premiums have increased while restricted capacity has also impacted the market. As a result, Ryan noted how he and his colleagues are having more consultative conversations with insureds about how their dollars can be best used to protect their businesses.

“There’s been much more consulting and really looking at different ways to have underwriters view their risk,” he said.

“Whether that’s different types of insurance - like parametric insurance - a wildfire defense program, or having insureds show how close the fire department is to the location, it’s really trying to get at it as best you can to paint the picture of how that particular company is protecting their space.”

In an interview with Insurance Business, Ryan was joined by Risk Strategies’ West Region leader, Patrick Roth (pictured right), to discuss how wineries have done a better job at safeguarding their properties from damage, why the industry is very collegial and the reasoning behind Risk Strategies’ acquisition of the North Bay unit of InterWest.

“The winery landscape is very different today”

Having worked with wineries for quite some time, Ryan stated that, 15-years-ago, the physical space that these businesses occupied was more of a forest setting with an abundance of trees that had not been managed.

“However, the winery landscape is very different today,” he said.

Ryan noted how wineries and even homeowners have engaged in very thorough landscaping in order to reduce the destruction of potential wildfires in the area. However, it is not the actual vineyards that are most susceptible to damage, but the structures on these properties.

“Vineyards have shown to be fire breaks, so there needs to be plans put in place on how to get people to safety quickly if one of these buildings were to go up in flames and find ways to best protect what stock or machinery needs to be saved,” Ryan said.

Also, the wineries that have been hit in the past are rebuilt with more modern materials that are much more flame retardant, creating fewer opportunities for structural damage.

Roth added how the consultative nature of brokers, carriers and MGAs is going to help these businesses safeguard themselves from natural disasters the best that they can.

“We need to be having these type of conversations with our clients that they probably haven’t had in the past, and they haven’t prepared for,” he said.

Maintaining a familial ethos

While competition between businesses can lead to a dog-eat-dog mentality, in the winery world, this is fairly moot.

“It’s really a very collegial industry, they very much progress with each other, which is interesting,” Ryan said.

Since wineries operate outdoors with very little to no structures separating the properties, this means that each is equally vulnerable to the devastations of natural disasters if the land is not properly maintained.

This extends to how each business can help one another if there is a threat to a competitor’s operations due to any type of loss event.

“If, God forbid, there’s an event during harvest, there’s a contingency plan to move those grapes to a different facility or a competitor across the street to crush the grapes and continue on as normal,” Ryan said.

It is a “we’re all in this together” mentality that makes risk mitigation and prevention a communal effort.

“It’s about being a specialist”

Risk Strategies recently acquired the North Bay unit of InterWest, which Roth said was driven by an ability to strengthen its winery segment with another company that looks similarly at this industry through specialization.

“This is a move away from a broker submitting an application to a carrier for coverage without knowing the ins and outs of a business and how a client is managing risk,” he said.

“It’s about being a specialist and having a person that really understands that thing that’s going on, especially when dealing with claims and being able to pay that client out appropriately.”

While InterWest had fielded propositions from other businesses for an acquisition, Ryan stated that, ultimately, the company wanted to work with a someone that was able to help provide insurance solutions even amid the threat of wildfires.

“And by collaborating together, it is not about having ‘yes’ or ‘no’ conversations, but more of a ‘let’s figure this out together’ mentality.”

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