Investments into Forestry & Biodiversity Summit

ForestRe Ltd is an independent consulting company that works closely with, but independently of, Globe Underwriting – an insurance Agency based in the City of London. The Globe forestry unit which I lead, is globally a uniquely experienced forestry risk mapping, measuring, modelling and pricing team.

No one wants to buy insurance. Only if the perceived climate risk is real and significant, does insurance become a logical step in managing the asset. We have found via experience that even some significant forest management organisations appear to be unfamiliar with the basic community causes of fire and hence adopting appropriate fire mitigation and management strategies. For these reasons our marketing strategy has been to inform and explain, and not to ‘sell’ insurance.

Hence, since the early noughties’ our focus has been in illustrating climate risk impacts on managed forestry in terms of frequency, severity and indeed the nature of risk itself such as unpredictable ‘extreme’ events. Since 2019 we introduced the use of earth observation data into the measurement and mapping of risk so bringing independent data to risk assessment. This is key to a rigorous procedure for pricing risk that also enables us to model loss data be it fire or wind, and so to provide the client with a risk profile anywhere on earth and to avail them of the opportunity to take measures to mitigate the forecast losses.

Through my involvement with eco2adapt, I have considered far more issues of forest adaptation and risk mitigation and discussed with various insurers whether they would ever consider incentivising such management activities. Through my involvement with the European Institute of Cultivated Forests, I am learning about adaptation and mitigation management. Consequently, from this year such concepts are included in our presentations as management tools that can help reduce the loss potential significantly, particularly from fire, but also pest and disease and to some extent wind.

Our presentations to investors for example this 7^th January (‘Investments into Forestry & Biodiversity Summit’ (https://ce-em.com/) continue to illustrate using actual examples, losses from climate events in commercial forests managed by the best in sector; how modelled loss data can be used in forecasting the volatility in returns to investors in the light of known risk; how insurance products can be tailored to the risk appetite of the forest owners and now, how can examples of risk adaptation, mitigation and management reduce potential losses, leading to new modelled risk for such forests. The following planning cycle was presented to the Summit that included not just the traditional management practices but mitigation tools now available to us to be one step ahead of the fire:

I always make the distinction that managed and public forests are very different risks. As we have seen in the recent California fires, it is the same old problems of excess fuel loads that have existed for years, and the same old fire management technology. This was observed in a very recent linked-In post by Edna Keane of Treemetrics Ltd. ‘ …That here we are again facing the same issue of excess fuel build-up leading to catastrophic fires …and still relying on many of the same fire-fighting methods discussed back then [1982]’.

By and large, managed forests and agro-forestry do try to control fuel loads as well as having defensive infrastructures in place.  But the latest threats especially in the USA is due among other factors, ill-informed ‘conservation’ principles. As insurers we need to provide the sector with data that quantifies the risk that various management practices engender, and offer clients an insurance price to fit their particular risk and to reward /incentivise their practices that really mitigate against major fires. But we shall continue to speak about the newer mitigation technologies and the importance of considering adaptation measures that over the long term will make forests more resilient to a warming climate.