Key person assurance as a key ingredient for the winemaking industry

Key person assurance helps businesses to identify their most critical personnel and protect them from any potential disruption or loss of skill, which could otherwise have a hugely damaging effect on the company. With the intricate and complex processes that the wine industry is known for, it is important to be as prepared as possible for any unexpected risk or challenge.

Winemaking requires knowledge, experience, and innovation– features that both winemaking and key person assurance have in common. Crafting and producing world-class wine requires specialist experience, talent and skills-often refined over many years/ decades and, in some cases, even a lifetime. Wineries will only reap the rewards of their current vintage in years to come due to the ageing process. Therefore, the loss of a key person such as a winemaker or production manager, due to death or disability, can have a material immediate impact on the overall business and its future sustainability.

We recognise that the wine industry faces many unique and specific risks. Accordingly, we have all the major South African insurance solutions available and at our disposal to ensure that a tailor-made insurance solution can be implemented specific to a client’s needs and circumstances. Correctly structured and tailored key person assurance can provide peace of mind to the shareholders and owners of a winery. It ultimately serves to help to ensure the continuity and success of the business in the unfortunate event of the loss of a key employee.

The proceeds of key person assurance can assist in providing the business with cash flow, compensating for lost revenue when a wine brand is coupled with an individual who is no longer able to produce their recognised wine. The cost of hiring as well as training a new winemaker can also be covered by the proceeds of key person assurance. The most efficient structure of key person assurance is, in most instances, for the business to ensure the life of the winemaker, with the winery being the policyholder as well as contributing the monthly premium for the insurance cover in place.

As advisers of PSG Wealth, we can assist with the implementation of key person assurance.

In this regard, we highlight, the following aspects:

• The appropriate risk cover provider – The business assurance market is a competitive space in terms of insurers available for consideration. Just as winemakers take care in selecting their harvest, our objective is to assist in selecting the best and most reputable product provider to meet specific requirements.
• Premium growth pattern type – Not every barrel of wine ages according to the same timeline. There are various growth patterns available, such as level, fixed escalation or age rated. Advice will be provided in terms of highlighting the differences between the various types of premium patterns, thus ensuring that an informed decision can be made to select the most suitable option. The options take into account the price relative to value, ensuring that sufficient cover is in place and that the best value is received in return for premiums paid.

Feel free to contact me for assistance in discussing and implementing the most suitable key person assurance solution to future-proof your business.