If you brew it, they will come.
The growing craft beer industry and Pennsylvania's nascent craft distillery industry are becoming accelerated drivers of the state's economy with a more than $2 billion economic impact each year.
With growing public interest, and eased state regulations, new micro distilleries and breweries are opening in the region regularly.
The rapid growth in that industry has created a new need from the insurance industry for agents and policies that strategically target the specific needs of alcoholic beverage manufacturers. But few agents specialize in brewing and distillery industry-specific insurance.
That is why enterprising agents and companies are scrambling to insure the burgeoning industry.
The significance of the surge in the alcoholic beverage manufacturing industry clearly can be seen at Allentown's manufacturing incubator, the Bridgeworks, where there is a startup brewery, Hijinx Brewing Co.; a distillery, County Seat Spirits; and a meadery, The Colony Meadery.
It can also be seen throughout the region with brewers such as Saucony Creek Brewing Co. in Kutztown to Manatawny Still Works in Pottstown.
Greater Lehigh Valley area brewers and distillers can name only a handful of insurance agencies that have the products and expertise to provide complete insurance coverage for a business that has liabilities covering many subspecialties.
Two local names that came up often are Kyle Rheiner and Todd Collins.
Kyle Rheiner is a Bethlehem native who has taken on an insurance specialty in craft breweries and distilleries in the past year or so.
An independent agent with West Chester-based Strickler Agency Inc. Insurance, Rheiner already was specializing in insurance products for the manufacturing industry.
In his spare time, he was an avid home-brewer and self-proclaimed beer snob who began to wonder if he could combine his love of beer and his expertise in insurance to generate more business.
When the Pennsylvania Legislature eased regulations for the creation of micro-distilleries, Rheiner knew he had the opportunity to carve a niche as an expert in the industry.
Todd Collins is an agent with HMK Insurance in Bethlehem. He already had background for the specialty because his agency had long been the insurance provider for two of the Lehigh Valley's largest micro-brewers, Fegley Brew Works and Weyerbacher.
Collins said he was able to take the knowledge and policies his agency already had for those clients and create insurance packages for the newer, smaller startups popping up around the region.
The knowledge that agents provide to clients is a valuable product, according to those they serve.
As a new distiller and CEO of County Seat Spirits in Allentown, Anthony Brichta said he originally had a hard time finding an insurance agent with the products and know-how he needed to get started, so he turned to an out-of-state agency – from a part of the nation that has had micro-distilleries for a longer period of time.
Curt Keck, CEO of Hijinx Brewing Co., also said he had a hard time figuring out what to do when he started the business as a sole proprietor. He was grateful that more appropriate help was available when he recently recreated his business as a limited liability corporation.
“I kind of went into it blind. A lot of things needed to be changed,” Keck said. Having a knowledgeable agent helped him get better, more appropriate coverage than he had the first time.
Brichta said issues such as federal surety bonds needed to cover the federal excise tax on liquor required someone with the nuanced skill to know how much insurance coverage is needed for a distillery that is looking to grow. He said it had to be accurate, because he wouldn't be able to produce more spirits than for which the distillery was bonded.
“You need an agent that understands that,” Brichta said.
Another issue for a distillery such as his own, which makes aged whiskey, is the appreciation of the value of the product.
He will have many barrels of whiskey stored at his distillery.
“If they get stolen or destroyed four years down the line, they're worth much more than if they were just insured for the cost of filling the barrels,” he said.
Keck noted that he had coverage needs that ranged from liquor liability, like a bar would have for the coverage of equipment and like a manufacturer would have.
Rheiner said that in the beverage industry, his clients don't need to worry just about the value of any equipment that is ruined. If a piece of equipment goes bad and the batch is ruined, they need to be able to claim that, as well.
Now that there are a growing number of micro-distilleries in Pennsylvania, Brichta is glad he has insurance choices and local experts to turn to for help, he said.
Still, there are limitations on the industry, Collins said. He noted that there are only a few insurance carriers that he says carry appropriately thorough and economical policies for brewers and distillers.
He named the Great American Brew Pack, The Hanover and Cincinnati Inc. as the main providers of brewery and distillery insurance.
“Any insurance provider can put together different insurance products to give you a policy, but it's generally less competitive than what you can get from a carrier that has a dedicated brewery or distillery policy,” Collins said.
Collins said he expects the number of available policies to grow, as well as increasing competition from agents in the specialty, as more micro-brewers and distillers open.
Collins likened it to the growing specialization in insurance products for elder care. As that industry grows with an aging demographic, it's more profitable for insurers to develop policies that target the specific needs of the industry.
The brewing and distilling industries are on par with that growth.
Small and independent American craft brewers contributed $33.9 billion to the U.S. economy in 2012, according to the national Brewers Association. In Pennsylvania, the contribution was $2 billion, the fourth highest in the nation.
The micro-distillery industry is too new for financial numbers, but dozens have opened since Pennsylvania law was amended to allow for them last year, and many more await approval.
“These businesses are going to drive a huge economy, especially in Pennsylvania,” Collins said. “If there's a specific growing industry and they know it, they'll create programs specific to that industry.”
For those who have taken the challenge of specializing in brewery and distillery insurance, the payoff is more than money.
For Collins, it's a combination of passions. Not only does he love beer, like your average American male, he also was formerly business development manager for Allentown and has a passion for startups and brownfield rehabilitation.
He said many of his clients are startups that retrofitted old industrial properties for their production and that he enjoys being a part of that process.
Rheiner said he loves his job and that it can be an adventure.
He recalled calling a potential client to set up an appointment to review a new policy.
“He said, 'I don't want my insurance agent showing up in a suit.' I said, 'Fine, I won't shave, either.' I'm not your typical insurance guy,” Rheiner said.