Key Challenges for the Industry
Physical damages to forest plantations, including investments into carbon offsetting
Timber Investment Management Organizations (TIMOs) losing a key stream of income as there is no ‘asset’ to generate carbon credits
Traditional insurance is unable to provide capacity, meaning the replacement values and the estimated future values remain uncovered
Key benefits of parametric insurance
Added Transparency
With pre-agreed parameters and payout structures eliminating ambiguity
Bespoke Policies
Custom covers for one or multiple locations adapted to the client’s existing coverage (e.g., traditional insurance, captive)
Swift Payouts
In a matter of days or weeks after a loss event, no longer requiring on-site loss assessment
Financial Freedom
Covering any type of direct or indirect financial losses resulting from the event
With the growing complexity of bushfires across Australia and New Zealand, the consequences of such events include physical damage, associated costs (such as suppression), land management challenges, replanting efforts, and the loss of potential revenue from carbon credits.
Descartes’ Parametric Bushfire Insurance: Safeguarding Multiple Locations with Precision
By utilising high-res satellite imagery and computer vision, Descartes’ parametric bushfire insurance covers any type of forest assets, such as forest plantations for timber investment and carbon credit issuance. Our Burnt Area product is fully scalable across any area, meaning no on-site visit is required.
case study example
Parametric Burnt Area Solution for New South Wales, Australia
A TIMO client in New South Wales, Australia, struggled to find sufficient capacity in the traditional market.
Problem
Their forest plantation generates a significant volume of carbon credits; therefore, protection for their carbon credit investment is a priority. The client suffered some initial losses in previous years, and with ignition conditions worsening across the region, they feared losing their carbon credits. This exposure represented a fully uncovered financial loss with their traditional commercial cover.
Solution
To combat this, the client went for Descartes’ Burnt Area solution. The policy is customised to the clients' precise exposure, with a pre-agreed value per hectare. By utilising satellite imagery to accurately detect burnt areas and severity, the client’s assets are fully covered with transparency on the indemnification amount.
Result
If a bushfire were to occur and 2,000 hectares are affected out of an insured area of 10,000 hectares, with the value per hectare being A$1,000, the client would receive a A$2 million payout.
Interested in a solution ?
