Distillery on the Moon

[InsuranceMan]

***** INSURANCE UPDATE *****

******* 10 / 10 / 14 **********

** DISTILLERY ON THE MOON **

Picture this if you will, a craft distiller that is making a wonderful multi-year aged product that is as smooth and richly complex in flavor as anything you have ever had the pleasure of having cross your palate; A multimillion dollar facility with one of the most beautiful, multiple story tall, hand crafted stills that you have ever seen; A cache of their distilled products with a value in the multiple tens of millions of dollars. Sounds pretty great right? Maybe it sounds like a goal that you hope to one day achieve for your own business? Now take this real life scenario and place this facility on the moon.

Did I lose you there? Did I really say that this facility with all of this value and all of this product was on the moon? Yes I did. However, I am speaking metaphorically. This situation really, truly does exist in regards to a client of mine. They have the facility. They have the beautiful still. They have a large cache of their product built up for current and future demand, but for all intents and purposes their distillery is located on the moon. Well, at least that is what 99% of the insurance companies think.

Recently I had the opportunity to work with a long term and very good client of mine in order to arrange for new insurance coverage for their ever growing and expanding craft distillery. There were many issues that needed to be overcome such as the value of their buildings (it is quite a lot), the value of their products on hand (but I am the only person in the country that has that figured out as well, see my post and read the whitepaper here: http://adiforums.com/index.php?showtopic=4883), but the biggest issue was their location.

I marketed this account to every single insurance carrier I could find that purports to have a “special craft distillery/beverage” program. I was met almost immediately with declinations or comments of, “You have to be kidding, right?” One underwriter with a company who has a “special program” even told me, “This thing may as well be on the moon! There is no way we would touch this risk.” And on it went. EVERY carrier that I spoke to had a reason to not write this account. From the values being too high on the location (that carrier has a very low limit that they can accommodate “per location”, but they have a cool name that sounds like they want to write distilleries); To carriers saying that they just simply cannot accommodate something of this size; To the location of this clients operation (basically on the moon); To the fact that even though “they” have a special program, they are just under-gunned to actually write this kind of risk; Or that they could not get this past their ReInsurance company; To the fact that they only handle very small to moderate risk size (this has been a problem with a lot of distilleries, their carriers drop them when they actually get too big). The odd thing is, many, many clients fall into this category of size. So what are these clients to do when they either outgrow their carrier or are told that a number of carriers only write “rural risks but there has to be adequate fire protection” (two things that do not go hand in hand)? They are to turn to me!

Of course I contacted the carrier that I have my exclusive program through, spelled out the details of the account, the fact that we needed my increasing and progressive valuation for their aging stock on hand, and you know what???? They did not even blink. No snarky comments about the “moon-like” location, no problems with the value, no issues with the lack of fire suppression and even better, they could do it in house without worrying about a reinsurance company riding them over the placing of the account! Within a week’s time we had a bindable proposal that we were able to execute in a timely fashion without missing a beat.

The reason I wanted to tell this story is simply due to the fact that, as I have said before, just because an agent or carrier may be able to place a risk does not mean they should. Do your checking prior to buying your coverage. Is the carrier someone that is going to drop you in the second or third year due to your increasing size? Does the agent even really know your business and how to handle it properly? What happens in the case of a loss to your stock on hand? Just because a carrier has a “shiny” name with “craft” or “specialty beverage” or “distillery” in it does not mean they are a perfect fit for what your needs may be.

Currently 99% of the carriers in the country use almost the exact same forms and endorsements to write craft distillers but those forms and endorsements in many cases do not provide adequate coverage for your true risk and at that point it just boils down to premium dollars (see this post: http://adiforums.com/index.php?showtopic=5245&hl= ) . In the end though, those premium dollars mean nothing if they are being spent on lackluster coverage.

From the very smallest of start ups, to those who have been in the industry for many year that are located on the “moon”, urban or rural, and everyone that is growing and in between, I can assist you. This is not a shameless self plug (well, not entirely) but a true plea from an experienced professional: Do your research, know what you are getting and make sure you have someone with experience in this industry that can go to bat for you should something happen. That is what you are spending your premium dollars for, make them count. From one room “mom and pop’s” to multimillion dollar facilities on the moon, make sure you are protected by someone and by a carrier that fully understands your exposure and by someone who is in this not to make a quick buck, but by someone who is doing all they can to better the industry as a whole ( see this post: http://adiforums.com/index.php?showtopic=5465) . After all, “It is one small step for craft distilleries, one giant leap for distillery-kind”.