(ROB) California Wineries Are Facing a Potentially Disastrous Wildfire Season Without Insurance

[AKR]

California Wineries Are Facing a Potentially Disastrous Wildfire Season Without Insurance
2021-07-13 13:04:44.760 GMT

(Robb Report)

California is in the midst of a severe drought, with 100 percent of the state
under abnormally dry conditions, according to the U.S. Drought Monitor. And 33
percent of the state is suffering through an exceptional drought, including a
large swath of Northern California encompassing Napa and Sonoma, where
temperatures hit triple digits over the weekend.

The conditions, combined with devastating wildfires the last few years—like
2020’s Glass Fire that destroyed the Michelin three-star Restaurant at
Meadowood and damaged more than two dozen wineries—has left California’s wine
regions bracing for another severe fire season. However, many wineries are
going to have to brave it this year without insurance, according to a report
by The San Francisco Chronicle.

“You have a lot of wineries and other ag producers that are uninsured right
now,” Ryan Klobas, CEO of the Napa Farm Bureau, told the Chronicle. “If fire
season hits someone that was hit by one of last year’s fires, they’re going to
be out of business.”

As numerous wineries went to market this year to renew their insurance, they
found their applications rejected. In Sonoma County, 100 of the Farm Bureau’s
400 members were told by their insurers they would not be renewed, the Napa
Valley Register reported in late May, with Napa wineries facing a similar
rejection rate.

Insurers began feeling the strain of wildfires more acutely in 2017, when a
series of blazes afflicted numerous properties, with one insurance area
broker, Risk Strategies, telling the Chronicle that it had 180 wineries making
claims that necessitated $22 million in insurance payouts. Last year’s fire
season—five of the six largest wildfires in the state’s history happened in
2020—was the straw that broke the back for some insurance companies. That led
insurers to stare into their actuarial tables and realize many regions
presented too great of a risk to insure wineries at the level they had before.

Even those wineries who have been able to hold onto insurance have been hit
with higher premiums and deductibles. Schramsberg Vineyards in Calistoga, for
instance, saw its premiums go from $200,000 to $800,000 with the deductible
skyrocketing from $25,000 to $500,000.

With private insurance not available, vineyard owners have looked to a public
option. California currently has a program called FAIR (Fair Access to
Insurance Requirements), that allows residential and commercial properties to
buy insurance from a state risk pool when they can’t find coverage elsewhere.
That program is not currently offered to agricultural businesses, but a bill
currently in the California Senate (S.B. 11) would extend the coverage to
farms and wineries; though that legislation may not work its ways through
Sacramento fast enough to help winemakers this year.

For now, Napa is focused on improving its mitigation measures, by beginning
implementation of a $42-million, five-year fire-prevention plan approved by
the Napa County Board of Supervisors in April. The plan has a multi-pronged
approach, focusing on removing vegetation that could be fuel for future fires
while also creating fuel breaks—swaths bare soil that can slow a fire by
starving it of trees or plants to burn. Simultaneously, individual vintners
are clearing brush and installing perimeter sprinkler systems in the hope they
can stave off encroaching flames and save their business from potential ruin.