1. Ashley McDonald Aon New Zealand WINERY INSURANCE RISK

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

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

4. 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

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

6. 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?

7. 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

8. INSURANCE COVER Will it be available?

9. All the premiums are made up as follows Before the Earthquakes, it was PREMIUMS

10. All the premiums are made up as follows After the Earthquakes, it is now PREMIUMS

11. COVERAGE CHANGES More self-insurance required of clients Previously 2.5% of the loss $1,000,000 damage claim @ 2.5% = $25,000 excess Now 5% of the site value for each and every event $10,000,000 sum insured @ 5% = $500,000 excess (regardless of the claim size)

12. 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

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

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