Sydney, Australia (CU)_ According to Forestry Australia, works are underway to find a solution to improve grower’s access to insurance following a fall in the number of companies offering coverage and a rise in premiums. According to CEO Jacquie Martin, the growing cost of plantation insurance has been a concern for some years, and premiums have reached an unacceptable level for many farm foresters and private forest farmers.
Speaking to the media, she said, “Anecdotally, this has seen some Forestry Australia members forced to opt out and grow their plantations without insurance, which is a difficult decision for a business to make”. She added, “We have been working closely with members and insurance brokers on this issue and look forward to finding a solution which suits all parties.”
According to David Geddes, a forestry consultant and former president of the Australian Forest Growers, capacity is a worldwide concern following Australia’s Black Summer bushfires and devastating fires in Europe and North America. Capacity in the domestic market has decreased since one of the primary providers, Primacy, which is basically a crop insurer, has withdrawn from plantation timber coverage. Its policies are in run-off.
According to Mr Geddes, the largest plantation producers in Australia, with risks distributed across many states and regions, are more likely to self-insure, whereas smaller enterprises dependent on the local market have been particularly hard impacted by capacity reductions. Mr Geddes, who is working on the problem alongside Forestry Australia, said that efforts are ongoing to get more capacity to assist producers before next summer season.
According to him, one farmer who chose to maintain coverage witnessed a ninefold spike in rates between 2020/2021 and the current financial year. He said, “I know lots of growers just thought I am going to take the risk this year and not insure, and I certainly know of one in Western Australia who lost a reasonable chunk of plantations in fires earlier this year”.
Mr Geddes notes that lacking insurance is especially catastrophic when losses impact a long-term crop that may not be harvested for another ten years, and the issue may also impact future supply. He said, “If you are deciding whether to plant trees or not, and you don’t think that you would get insurance, that is one of the things that would stop you planting”.
