Forestry Australia says it is working on a solution to increase access to insurance for growers after a decline in the number of providers offering cover and a surge in premiums. Source: Timberbiz
CEO Jacquie Martin says the rising cost of plantation insurance has been an issue for a number of years, and premiums have climbed to a point where they are unaffordable for many farm foresters and private forest growers.
“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 told insuranceNEWS.com.au.
“We have been working closely with members and insurance brokers on this issue and look forward to finding a solution which suits all parties.”
Forestry consultant and former president of Australian Forest Growers, David Geddes, says capacity is a global issue following the Black Summer bushfires in Australia and severe fires in Europe and North America.
In the local market capacity declined as one of the key providers, Primacy, which is mainly a crops insurer, pulled back from plantation timber cover. Its policies are in run off.
The biggest plantation growers in Australia, which have risks widely spread over states and areas, are more likely to self-insure, while smaller operations relying on the local market have been hard hit by reduced capacity, Mr Geddes says. One grower who elected to continue with cover experienced a nine-fold increase in premiums between 2020/21 and the current financial year, he says.
“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,” he told insuranceNEWS.com.au.
Mr Geddes says not having insurance is particularly devastating when losses affect a long-term crop, which may not be due for harvest for another decade, and the issue could potentially affect supplies into the future. “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,” he said.
