Key Challenges for the Region
Increasing Bushfire Severity: The growing complexity and intensity of bushfires across Australia and New Zealand are causing severe physical damage to forest plantations.
Carbon Revenue at Risk: Bushfires can significantly reduce forest carbon stocks, preventing forestry assets from generating and selling voluntary carbon credits.
Insurance Gaps: Traditional insurance solutions fail to cover projected future values, carbon credit losses, and the high costs associated with forest replacement.
Key Benefits of Parametric Insurance
Transparent Terms
Policies are built on measurable triggers—like rainfall or temperature—so clients and their brokers know exactly when payouts occur. No fine print, no ambiguity.
Fast, Predictable Payouts
Once a triggering event occurs, payment is issued quickly and automatically—no need for on-site assessments or lengthy claims processes.
Customized Coverage
We work closely with brokers to build each policy around the client’s specific risk and budget profile, providing protection where traditional insurance often cannot.
Flexible Use of Funds
Payouts are based on the severity of natural events occurring, not solely on proven losses, giving clients immediate access to funds and empowering them to cover any type of financial loss, not just for physical damage.
Bushfires pose a dual physical and financial threat to forestry assets in New Zealand. Beyond asset destruction, fire events can jeopardize long-term carbon revenue streams and regulatory compliance.
Descartes’ Parametric Bushfire Insurance: Protecting Carbon Value
Descartes’ Burnt Area parametric bushfire insurance leverages high-resolution satellite imagery to detect burned areas at insured locations. When a predefined level of burnt area is identified, payouts are automatically triggered. This solution provides fast liquidity to cover both direct and indirect financial losses, including carbon credit obligations and replacement costs.
case study example
Parametric Bushfire Solution for Forestry Investments in New Zealand
A forestry investment manager in Gisborne, New Zealand realised that its traditional insurance did not provide comprehensive coverage, as it only covered physical loss to the forest asset.
Problem
Operating in the voluntary carbon market, the company faced the risk that if a bushfire were to significantly reduce the forest’s carbon stock, it could lose its ability to generate and sell carbon credits, along with being forced to surrender NZUs back to the government. In addition, the substantial costs of replacing the lost forest would not be covered under their traditional policy.
Solution
To combat this, the forestry investment manager looked for complementary coverage. Descartes’ Burnt Area solution utilises high-res imagery to identify areas burned in and around the coverage area. If a burnt area is detected, swift payouts are made—providing liquidity to surrender NZUs and replant immediately.
Result
If a bushfire were to occur and 1,000 hectares are affected out of an insured area of 8,000 hectares, with the value per hectare being A$1,000, the client would receive a A$1 million payout.
Contact Us
Whether you're quoting a complex risk, looking to break into new markets, or just curious about parametric insurance, our team is here to help you win. Reach out and we will get back to you within 48 hours.
