Natural disasters hit the U.S. hard in 2017.
As if it weren't enough in 2017 to have back-to-back hurricanes and flooding in the Southeast, California's wine country also took a beating.
Ferocious wildfires spread quickly through homes, businesses and vineyards, jumping highways to burn nearly everything in their path.
Then, Southern California battled raging flames as well — five fires that filled a space as large as New York City and Boston combined, according to CNN.
Agents and brokers, insurers and policyholders have all learned from this experience and will carry that knowledge with them. This will hold true for all insurable risks in the region from personal property to businesses of all sizes, particularly wineries.
Eye witness to the devasation
I was on the ground assisting our adjusters immediately after the area was opened to us.
On the scene after the fires passed, we could see nothing left on some properties but lone chimneys standing and burned shells of cars and trucks.
Neighborhoods were burned to the ground. Entire wineries were taken out, vineyard estate dwellings burned, irrigation systems and pump stations ruined.
Fortunately, about 85% of the region's grapes had been harvested before the fire and will continue to make their way to store shelves.
Cacophony of claims
As a result of this damage, a variety of coverages have kicked in for policyholders, particularly homeowners. For our policyholders, which include many wineries in the region and across the U.S., we've seen claims related to property and equipment, tanks and barrels, irrigation systems and pumps, estate vineyard dwellings, and a number of business interruption claims.
Aside from the visible damage, employees couldn't come to work because their homes were destroyed or roads were closed or unsafe to travel. At the same time, the region was off-limits to tourists at harvest season — normally the region's busiest time of year.
The new normal
The public's attitude toward the risk of wildfires has changed, particularly as new wildfires in Southern California reduced hundreds of thousands of acres to ruins.
Fear has entered the equation. Now, residents and business owners in search of adequate, quality coverage are reaching out to their agents, brokers and insurers, rather than waiting for them to check in at renewal time.
Although many homeowners and business owners had coverage for wine country wildfires, they soon discovered the limitations of that coverage.
For example, some found they did not have coverage for irrigation systems or pumps that were located far from the main structure. Assessing the property and business, making recommendations, and providing proper coverage is what specialty insurers do, and they can guide the agents working with the client.
Looking forward
The region could see an exodus of non-specialty insurers, which once took on winery risks, leaving the market. Without knowledge and experience, they likely did not properly assess the risk. Now, these insurers are straining to pay hefty claims, while their insureds (many of whom are victims of inadequate coverage) are struggling to rebuild their homes and businesses with insufficient funds.
Agents and brokers will have to step up their efforts, looking more carefully at exposures to make sure policyholders have the right coverage. For wineries, for example, agents will be sure to suggest coverage for the estate dwelling, winery and storage facility, and for the irrigation systems and pump house as well.
Persistent risk
The risk of wildfires is not going away. High temperatures are drying out vegetation, which fuels these fires. California Gov. Jerry Brown said that deadly wildfires like these would likely continue for decades.
So, what can homeowners or business owners do to protect themselves? Why is it that one building can be reduced to rubble, while the structure standing next to it is left perfectly intact?
This is due partly to luck and the path of the fire, but also could be due to strategic risk mitigation strategies employed by the homeowner or business owner.
Working with a good agent connected to a knowledgeable specialty insurer is a good first step. Obtaining comprehensive quality insurance is critical.
However, risk mitigation strategies can be effective. Readyforwildfire.org recommends certain distances between homes and vegetation, specific lengths for cut grass, prompt removal of dry leaves from ground and gutters, pruning tree branches over roofs, and considering fire-resistant plants, among other things.
For wineries, vineyards are natural fire breaks: They slow the fire because they contain little brush for the fire to ignite. But there is still more that can be done.
Proactive steps
Despite the best mitigation efforts and most comprehensive insurance policies, the risk of wildfires cannot be eradicated completely. What we can do is focus on those efforts and insurance policies to make sure homeowners and business owners are ready if disaster does strike.
Agents and brokers can play a key role here in assisting their policyholders in determining their risks and the right coverage. Specialty insurers will also see an increased role to play in insuring wineries and other specialties, as other players leave the market.
Most vital perhaps, is the importance of supporting these areas devastated by the recent wildfires in their efforts toward recovery.
Larry Chasin is president and CEO of Pak Programs, which provides insurance programs for wineries, vineyards, breweries, wine & liquor retailers, cideries, distilleries, liquor & wine importers and distributors. To reach this writer, send email to larryc@pakprograms.com. The opinions expressed here are the writer's own.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.