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Forests can be insured

Forests were here a long time before humans.  And yet, it’s up to us to protect and maintain what are effectively, the most biodiverse and valuable ecosystems on the planet.

We are Underwriters who specialise in specifying insurance products for forestry and tree crops throughout the world.  For us, it’s impossible to overlook the wide range of inter-related issues and challenges that contribute to this vital topic.  All play a part in the assessment of risk.

The good news is that, whether it’s fire, lightning, explosions or aircraft (FLEXA) we can cover the risk.  The same is true for country cover for wind, cyclone and tornado, hail, frost, snow and ice, landslide and flood.  It’s a pretty comprehensive list.

Who owns the forests

Forests throughout the world vary greatly, from the genus of the trees, their age, to whether they’re planted or natural.  Their local communities and Government’s play a big part in how they’re managed and sustainability levels.

Sustainable forest management makes sense.  It helps to maintain and enhance the values forests provide.  Now and for the future.

According to the Programme for the Endorsement of Forest Certification (PEFC) forest certification’s biggest challenge is the different types of ownership and management.  It reports that 25 percent of the world’s forests are owned by families and communities.  The fact that more than 90 percent of forest is currently uncertified is due to resources and costs.

The deforestation threats

Sustainable forests equal stabilised land, period.  Humans have been cutting down trees for more than 10,000 years, to build homes, create fires to stay warm or, to clear land for farming.  As long as forests are replanted after harvesting, or allowed to replace themselves, the land will remain forest land.  Instead, much of it has been allowed to shrink.

The resulting deforestation has led to the destruction of habitats, endangering species.  This causes soil erosion, leading to barren land, at risk of flooding.

There’s also the increased atmospheric pollution, mostly carbon dioxide, produced as a result of forests being cleared by burning trees.  The knock-on effect is an increase in carbon dioxide, as reduced levels of photosynthesising vegetation takes hold.

Time for a change

However, in recent years planted forest land has increased.  This is largely due to China’s forestation policy.

As Pardus Underwriting provides fire and tailor-made insurance cover to the wide range of stakeholders involved in forestry and tree crop management, this includes planted forests.

According to the UN Food and Agriculture Organization (FAO) planted forests now account for 5.2 million hectares.  Often used for their timber or fibre these forests attract a heightened risk exposure, hence the importance of insurance.

We typically provide capacity for investors, plantation managers, commercial timber, pulp and paper plantations, timberland investment schemes (TIMOs) and real estate investment trusts (REITS).

Serving all groups, means every stakeholder is covered, which is crucially important for sustainability, especially with a long-term investment, that takes anywhere between 10-100 years to grow.  Each group needs the other, to ensure planted forests are ecologically and financially managed.

We also insure natural forests, especially those managed under the Reduced Emissions through Deforestation and Forest Degradation (REDD) programme, or other sustainable forestry initiatives.

Making the risk worthwhile

If you invest in something – in any sense of the word – knowing what challenges might lie ahead and how you can be prepared, makes the risk worthwhile.  So, it’s a managed risk.

At our core, we are effectively de-risking investment in forestry through insurance.  The cover is against wind, fire, lightning, explosions and the impact of aircrafts (FLEXA), as well as other, less frequent perils.

Treating any stakeholders’ part in the management of forestry as an asset, goes a long way to helping individuals and groups to understand what they’re up against and how best to respond, in the event of say, a catastrophe.

When you consider that 33 percent of carbon emissions could be cut by the curbing or reversing of deforestation, you realise just how important it is to protect forests, everywhere.  Insurance protection is the best way to ensure this.  While risks are common and natural events are inevitable, insurance is a foolproof way to guarantee forests live on, by enabling replanting and restoration.

If you would like to find out more about forestry insurance cover click here to speak to our forestry team today.

2018-06-27T17:13:20+00:00