State of the Insurance Market:
2025 Outlook

Wineries

The U.S. wine industry continues its restructuring, driven by shifting consumer preferences, economic pressures, and climate risks. While these challenges persist, they also present opportunities for wineries to innovate, enhance sustainability, and refine risk management strategies to ensure long-term resilience.

Though the wine industry spans many regions, trends shaping coverage and pricing are most evident in California and Western states, where concentrated vineyard acreage and production highlight rate pressure, coverage challenges, and heightened underwriting scrutiny in these high-exposure markets.

Market Conditions

 

In today’s environment, wineries face a dynamic and increasingly complex risk landscape. From navigating regulatory shifts and supply chain disruptions to managing climate-related exposures and operational volatility, the need for flexible and responsive insurance solutions is more critical than ever. As the industry evolves, aligning coverage with emerging risks is essential to safeguarding long-term success and business continuity.

While the wine industry operates across multiple regions, many of the trends influencing coverage and pricing are most pronounced in California and the Western states, where the majority of vineyard acreage and production are concentrated. Commentary on rate pressure, coverage, and underwriting scrutiny is particularly representative of what we’re seeing in these high-exposure markets.

  • Evolving consumer behavior: The 2024 California wine grape harvest was the smallest since 2004, impacted by reduced acreage, heat waves, and declining demand. Gen Z and Millennials are reshaping the market, favoring diverse flavors, low- or no-alcohol options, and experiential wine tourism over traditional wine consumption. Direct-to-consumer (DTC) sales continue to be a challenge, requiring new engagement strategies.
  • Debate over wine and wellness: The Alcohol, Tobacco Tax and Trade Bureau have proposed mandatory disclosure of allergens used in wine production and require “Alcohol Facts” statement on the labels.
  • Economic pressure and bulk winery oversupply: Despite record low demand for grape contracts, the average price per ton remains high due to multiyear contracts with escalation clauses. Rising production costs, labor shortages and industry consolidation are reshaping winery operations.
  • Climate risk and the insurance landscape: The increasing severity of wildfires, floods and storms has made insurers more selective, leading to higher premiums and stricter coverage terms. Wineries must demonstrate proactive risk mitigation to improve insurability.

Coverage Considerations

 
  • Property Market: The Property insurance market remains firm and restrictive, particularly for wineries. While some softening in commercial property rates has occurred, the January 2025 Los Angeles wildfires served as a stark reminder of the increasing impact of extreme weather.
    • Key takeaways:
      • Market remains cautious: Carriers are taking a more conservative stance on property exposures.
      • Combined exposures raise concerns: Properties that include dwellings and hospitality (e.g., on-site homes, inns, event venues) alongside winery operations are viewed as higher risk. These exposures are especially challenging in wildfire-prone regions.
      • Stronger risk management is essential. Underwriters expect:
        • Detailed loss control measures
        • Robust fire prevention systems
        • Clearly defined business vs. residential use areas
        • Adequate defensible space

    Wineries that proactively address these factors are better positioned to receive favorable coverage terms and pricing.

  • Liability Markets: While more stable than property, the liability market is experiencing moderate rate increases, and presents its own challenges:
    • Emerging product risks: Alternative wine products and wellness-focused offerings introduce new liability exposures.
    • Regulatory scrutiny: Changing labels, advertising, and product liability regulations require vigilance.
    • Coverage adequacy concerns: Many standard policies may not fully address emerging risks.
  • Nuclear verdicts and liquor liability: The increasing frequency of nuclear verdicts in Liquor Liability cases—particularly those involving over-service, driving under the influence (DUI) charges, and social host liability—is driving up claim’s severity. As a result, insurers are tightening underwriting guidelines, raising premiums, and reducing capacity for wineries with on-premises consumption.
  • Impact on liability rates and coverage needs: Rising verdict sizes are also fueling the need for higher Excess Liability limits. Many wineries may find their existing coverage inadequate in the face of escalating jury awards, prompting a push for increased umbrella and excess limits to better protect against CAT claims.
  • Risk management and underwriting scrutiny: Wineries should expect heightened scrutiny on risk management practices, including staff training and service protocols, as carriers look to mitigate exposure in 2025.
  • Business Interruption & Supply Chain Coverage: Coverage remains available but with greater scrutiny of contingent business interruption risks and insured revenue projections.
  • Cyber & Management Liability: This market remains stable with signs of softening in some areas as low as -15%.
  • Crop: Government programs remain competitive, with new products being introduced to address risks like smoke exposure. While weather volatility and inflationary pressures persist, expanded offerings and underwriting innovation are helping to support market stability.

New capacity is still entering the market, and we are seeing more creative approaches to finding solutions.

Wineries Rate Forecast

 

NOTE: The rate trends depicted in this chart  are particularly influenced by developments in California and the Western states, where a significant portion of wine production is concentrated.

Rate Forecast
Wineries: Package and programs +10%
Wineries: Property +10% or higher
Wineries: Stock throughputs -10%*
* with improved terms and negotiable profit-sharing agreements
Wineries: Difference in conditions -5% to -10%
Wineries: Admitted Market General Liability +5%
Wineries: Excess and Surplus Lines Market +5% to +10%
Wineries: Auto +12% or higher
Wineries: Umbrella and Excess Liability +15% or higher
Wineries: Workers’ Compensation +5% to +10%
Wineries: Cyber and Management Liability -15%

Recommendations

 

The winery industry’s transformation brings both challenges and opportunities. Wineries that innovate, manage risk proactively, and adapt to customer shifts will thrive. Now is the time for strategic planning and proactive insurance management to stay competitive.

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Update and validate property valuations: Work with brokers and carriers to ensure building and equipment valuations reflect replacement costs.

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Strengthen CAT and wildfire resilience: Implement defensible space strategies, upgrade fire suppression systems, and participate in insurer risk mitigation programs to improve coverage terms and unlock carrier capacity.

Checkmark-2024-SOTM

Evaluate liability coverage: Ensure policies account for alternative wine products and evolving regulations.

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Improve business interruption and supply chain strategies: Assess vulnerabilities and refine coverage.

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Leverage technology for risk assessment: Underwriting today is data-driven and insight led. Use digital monitoring of vineyards, automated inventory tracking, AI-driven risk assessments and CAT analytics to enhance underwriting discussions and secure better terms.

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.