The coverage area has become more restricted
As climate change wreaks havoc on landscapes, Larry Chasin, CEO of PAK Ventures, reveals how wineries that need land to create products must find new ways to secure cover against catastrophic weather events.
“If you are able to secure coverage, especially in areas with a history of wildfires, there are very few options for property coverage these days,” he said.
In an interview with Insurance Business, Chasin talked about how wineries secure needed coverage in a tight market and how brokers and insurance companies can prepare a customer for a worst-case scenario.
Find solutions in difficult times
One of the most troubling developments in the climate crisis is the frequency of extreme events.
“As insurers, we refer to these events as 100-year events or catastrophic 500-year events,” Chasin said. “Every fleeting loss event is now referred to as a once-in-a-lifetime disaster, but we hear about this every year now.”
Secondary hazard events, such as wildfires threatening wineries, have caused huge losses to companies and insurance companies.
“Transportation companies are losing billions of dollars because of these disasters, and they’re happening in places that haven’t dealt with these serious issues before,” Chasin said.
“We are now seeing unprecedented exposure, negative selection and inadequate rates,” said the CEO.
Furthermore, properties with great property value, especially those with specialty wine barrels for aged wine, create a more random chance of securing coverage.
“In the past, they could go to one insurance company to cover the entire exposure,” Chasin said.
“And you see agents having to go to four, five, six different carriers to provide enough to cover what their exposure might be.”
This makes claims more complicated when a loss event occurs, as many claim adjusters must visit a site to assess damages, especially when coverage is purchased from the surplus and surplus market.
“It’s going to get really complicated and really fast,” Chasin said.
Mitigating potential losses or headaches with the help of a broker
According to Chasin, it’s extremely important for brokers to stay in constant contact with their insured and stay current on risk reduction and prevention techniques as they become available.
“We found that presenting real, relevant claim scenarios is a good way to get insurance to think about risk management and loss prevention in a somewhat different light,” he said.
Avoiding a doomsday scenario starts with securing the correct form of hedging for the business, to avoid a loss exposed.
“These are the events we’re all most concerned about, which is to limit any surprises that could surprise the customer,” he said.
This results in working regularly with insurers to assess client value while including new additions and necessary property upgrades.
Insurance companies have more insight into how to create a defensible space to protect the operation from avoidable damage or to recover from it more quickly.
However, there is also a communal aspect to protecting the winery’s fertile lands.
“If I do everything I can to protect my property from harm, but the winery next door doesn’t, that still creates a greater opportunity for loss,” Chasin said.
“Being able to come together as an industry or as a community and try to address these things. From a bigger perspective is something I’ve seen happen a lot.”
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