According to stakeholders, the French wine industry, the most lucrative in the world, is supported by numerous insurance brokers that specialise in risk managing and providing coverages for wineries and vineyards. Australia, by volume the fifth biggest exporter of vino globally, also has a substantial wine industry. However, wineries and vineyards Down Under don’t have access to the same broker expertise as their French counterparts. So, is Australia’s wine industry a broker opportunity?
“In France there are brokerages that have teams focusing on the wine industry and also independent brokers who specialise too, so they only do vineyards,” said Tanguy Touffut.
Touffut is CEO of Descartes Underwriting, a Paris-headquartered firm that offers parametric coverages in Australia and New Zealand. On a recent visit to Australia, Insurance Business asked the CEO about the range of often climate-fuelled threats faced by the global wine industry. His answer suggested that local brokers would likely find that Aussie wine operations could use their risk managing expertise.
Under pressure: Grapes and climate threats
“Viticulture is a very sensitive industry,” he said. “Frost is a key challenge in France - but also in Australia for local winemakers and the industry here. In Australia, demand for parametric offerings to deal with frost impacts on vineyards is probably the top demand right now.”
Other threats to vineyards, he said, include hail, drought, fire, rain and floods.
Touffut co-founded his underwriting firm in 2018. In response to vineyard destruction from hailstorms, his firm helped French brokers come up with some of the first parametric offerings for winemakers to counter this threat.
"If you face very small hailstones, then the vineyards can be quite resilient - but in the end, you may lose between 10% and 50% of the crop,” he said. Larger hailstones, Touffut said, can destroy an entire vineyard crop.
In France, this hail threat is now a regular feature of the growing season. In recent days, according to news reports, hail destroyed up to 1,000 hectares of vineyards in France’s champagne region.
“The combination of the wine industry being a very strong part of the economy and the frequency of disasters meant, I think, they had to push for parametric solutions for their vineyards,” he said. Australia, he suggested, could be reaching that tipping point.
“The French market is a lot more sophisticated on this topic and Tanguy obviously brought this solution to the growers in France some time ago,” said Lynn Roehrig, head of business development for Descartes across Australia and New Zealand.
Sydney-based Roehrig referred to Spring’s significant frost event around the Barossa Valley last September. According to news reports, some growers lost all of their crop.
“I think it's something that still obviously needs an education process,” he said. “But we're definitely feeling like it's something we can transfer our knowledge and skills that we've applied in France and bring that to Australian clients.”
Currently, vineyards in Australia can find some conventional crop insurance offerings for weather-related risks including drought, excessive rainfall, frost and hail. Other coverage offerings focus more on winery and vineyard operations.
There are also some parametric offerings in the market. Roehrig said Descartes’s local parametric focus is excessive rainfall, drought, frost/cold temperatures and fire.
At this stage, the firm’s hail protection offering for vineyards is not available in Australia, said Roehrig, because of radar limitations.
“Currently the hail product we offer is focused on the car dealership segment,” he said.
The radar used by Descartes locally, said Roehrig, which is deployed by the Bureau of Meteorology (BOM), is best suited for their car dealership parametric offerings in some metropolitan areas and for the larger hailstones (3cm and above) that fall in those regions.
Deadly combination: heat and frost
Heatwaves are also a growing threat. In recent years, said Touffut, heatwaves have occurred with an intensity and frequency “that is relatively new.”
Vines are very resilient to heat but when heatwave temperatures reach 45 to 50 degrees Celsius, vines can suffer damage.
“This is happening in some parts of the winegrowing world,” he said.
The overall temperature increases across the world, say winemakers, is also advancing grape maturity and harvesting by up to a few weeks, compared to 50 years ago.
“So the plants tend to be more vulnerable to a frost event,” said Touffut.
The parametric solution, he said, involves installing a weather station locally and recording temperatures at a level of 50 cm above the ground – the same height as growing grapes.
Which winemakers are going for parametric offerings?
Touffut said a large number of his firm’s wine industry clients in France are among the premium winemakers. Their bottles, he said, often sell for more than 50 euros [AU$88] retail.
“It's the more expensive wine first because they can afford to buy this insurance,” he said. “We have seen some clients selling bottles that cost thousands of euros per bottle, including a really top Chardonnay maker.”
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