WINERY INSURANCE RISK Ashley Mc Donald Aon New

TODAY WE WILL…. • Seddon Earthquake • What was the real loss • What

THE SEDDON EARTHQUAKE 2013 • What was damaged • Buildings • Tanks • Concrete

WHAT WAS THE REAL LOSS • Buildings • Tanks • Concrete Foundations and Concrete

WHAT WAS THE COST FOR SEDDON? • Seddon • Estimated at $250 million? •

RESULTING UNDERWRITING • What are you doing to minimise the risk? What % of

RESULTING UNDERWRITING • What are you doing to minimise the risk? Baffling the tanks

PREMIUMS • All the premiums are made up as follows • Before the Earthquakes,

PREMIUMS • All the premiums are made up as follows • After the Earthquakes,

COVERAGE CHANGES More self-insurance required of clients Previously 2. 5% of the loss $1,

COVERAGE CHANGES • No automatic reinstatement of the sum insured unless agreed in writing

CONCLUSION • Higher premiums (top end of the rating scale and no chance of

CONCLUSION • Insurance companies will be looking for ‘prudent’ clients who are managing the

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WINERY INSURANCE RISK Ashley Mc. Donald Aon New Zealand

TODAY WE WILL…. • Seddon Earthquake • What was the real loss • What was the cost of Seddon • Resulting Underwriting • Premiums • Coverage changes • Conclusions

THE SEDDON EARTHQUAKE 2013 • What was damaged • Buildings • Tanks • Concrete Foundations and Concrete Pads • Wine Product • Bottle damage

WHAT WAS THE REAL LOSS • Buildings • Tanks • Concrete Foundations and Concrete Pads • Wine Product & bottle damage • Future Sales – up to 5 years • Effect on cash flow • Future development of the business • Market share

WHAT WAS THE COST FOR SEDDON? • Seddon • Estimated at $250 million? • Napa • Estimated are $300 million USD Sept 14) only 5% of people have any earthquake insurance (as at 1 st of

RESULTING UNDERWRITING • What are you doing to minimise the risk? What % of NBS do you comply with? What is the construction & how will it react? What is the soil at the location like? Fire Loading? Accumulation?

RESULTING UNDERWRITING • What are you doing to minimise the risk? Baffling the tanks Strengthening of tank bases Strengthening of the foundations What alternative products are available e. g. plastic tanks

INSURANCE COVER • Will it be available?

PREMIUMS • All the premiums are made up as follows • Before the Earthquakes, it was Acc. Damage Fire Burglary Natural Disaster Impact Lightning Explosion Storm/Cyclone Water Damage Malicious Damage

PREMIUMS • All the premiums are made up as follows • After the Earthquakes, it is now Acc. Damage Fire Burglary Natural Disaster Impact Lightning Explosion Storm/Cyclone Water Damage Malicious Damage

COVERAGE CHANGES More self-insurance required of clients Previously 2. 5% of the loss $1, 000 damage claim @ 2. 5% = $25, 000 excess Now 5% of the site value for each and every event $10, 000 sum insured @ 5% = $500, 000 excess (regardless of the claim size)

COVERAGE CHANGES • No automatic reinstatement of the sum insured unless agreed in writing and an additional premium is paid • No repairs until the excess is paid. • No claim for upgrading undamaged property in accordance with regulations • Higher premiums

CONCLUSION • Higher premiums (top end of the rating scale and no chance of reduction) • Self-insurance levels being carried by the winery increasing • Upgrade costs being imposed on the winery instead of being able to budget for it. • Council problems – no code of compliance until the entire premises up to code, not just the damaged property.

CONCLUSION • Insurance companies will be looking for ‘prudent’ clients who are managing the risk • Insurance companies will charge the winery for the risk as they see it