Why bushfire risk is reshaping the broker landscape
For brokers across Australia and New Zealand, placing bushfire cover has never been more difficult. After the catastrophic Black Summer of 2019–2020, which burned more than 24 million hectares and cost the insurance industry over $2.4 billion, the market has tightened significantly. Carriers have reduced capacity, imposed stricter sub-limits, and in many cases withdrawn bushfire protection altogether. At the same time, climate change is lengthening fire seasons, driving exposures into new regions and creating levels of volatility that challenge even the most sophisticated catastrophe models.
For clients, this shift means higher premiums and narrower protection. For brokers, it means something more personal: difficult renewal conversations and a growing risk of losing valued accounts. The ability to find credible alternatives to fill this coverage gap is no longer just about product knowledge; it has become central to client retention and professional reputation.
These insights draw on the expertise of Lynn Roehrig, Head of Business Development for Australia and New Zealand at Descartes, who has been closely advising brokers on how parametric solutions can address bushfire exposure.
Beyond product: parametric cover as a client retention strategy
Parametric insurance is often positioned as an “alternative risk transfer” tool. While that description is accurate, it overlooks its real strategic value for brokers. By offering parametric bushfire cover, brokers are not simply giving clients a new type of policy; they are demonstrating foresight and expertise at a time when traditional options are shrinking.
This shift transforms the broker’s role from distributor to adviser. A broker who can explain how a satellite-verified trigger works, or how a payout will flow within days of a fire, is showing that they understand the realities of today’s climate-driven risks and are prepared to offer solutions when others cannot. For clients, that level of engagement builds trust. For brokers, it strengthens relationships and makes it harder for competitors to dislodge them.
How parametric bushfire insurance works in practice
Unlike indemnity policies, parametric cover is not tied to an adjustment of actual financial losses. Instead, it is triggered by an objective measure, such as the detection of a burnt area within or around a client’s defined coverage zone. Satellite imagery provides a transparent and verifiable record of the event, eliminating disputes about what qualifies as a loss.
The benefit for clients is clarity and speed. They know in advance what will trigger a payout, and when that condition is met, the claim is settled quickly without the delays of a traditional loss-adjustment process.
Policies can also be customised to the specific geography of a plantation, a carbon offset project, or an agricultural estate, and scaled to cover areas that would otherwise be impossible to inspect manually.
For brokers, this clarity makes conversations with clients easier, reducing the uncertainty that so often undermines confidence in the insurance process.
Where brokers can add the most value
Not every client is an immediate fit for parametric solutions, but certain segments are particularly well aligned:
- Plantation owners and forestry groups, where a single fire event can wipe out years of value creation.
- Carbon credit investors, whose financial exposure is directly tied to forest preservation.
- High-exposure landowners or agribusinesses, struggling to maintain affordable bushfire cover.
- Clients with poor loss histories, where traditional insurers are reluctant to provide capacity.
By identifying these high-exposure clients early, brokers can introduce parametric bushfire cover not as a last-resort option, but as a proactive measure that demonstrates careful risk management. This positions the broker as a partner who anticipates problems rather than one who reacts after opportunities have already closed.
Why brokers should act now
Bushfire season in Australia typically peaks between spring and autumn, though the precise timing varies by region. What is consistent, however, is the trend: conditions are becoming drier, seasons are stretching longer, and risks are intensifying. The availability of traditional bushfire cover is not expanding in response. If anything, constraints on capacity are tightening further as global reinsurers account for compounded losses.
For brokers, waiting until a client has already been declined or left with inadequate cover leaves few alternatives. By introducing parametric options early, brokers can turn a potential coverage crisis into an opportunity to demonstrate creativity, foresight, and commitment to protecting their clients’ assets.
Real-world example: protecting carbon credit investments from bushfire
The value of parametric bushfire insurance is not just theoretical. Descartes recently partnered with a leading Australian timber investor to safeguard their carbon credit portfolio against the risk of bushfire. The investor faced mounting concerns that a single fire could erase both years of plantation growth and the financial value of their carbon credits.
Through a customised parametric solution based on satellite-detected burnt areas, the client secured rapid, transparent payouts in the event of fire. This structure gave them the confidence to continue investing in sustainable forestry while managing exposure to climate volatility.
For brokers, this case study demonstrates how parametric bushfire cover can be applied in practice to protect high-value, climate-linked assets. It also highlights the importance of early engagement: by structuring the policy ahead of the season, the client ensured their portfolio remained resilient at a time when traditional coverage was limited.
A strategic advantage in a tightening market
Parametric bushfire insurance is not just another product in the market; it is a way for brokers to strengthen relationships, win new clients, and safeguard their own businesses in an increasingly challenging environment. It closes real coverage gaps, provides transparency at a time when uncertainty is growing, and reinforces the broker’s position as an indispensable partner in risk management.
As bushfire risks intensify and traditional solutions narrow, the brokers who embrace parametric insurance will be those who thrive, not only protecting their clients, but also securing their own long-term relevance in a changing industry.
👉 Learn more about how Descartes partners with brokers to deliver tailored parametric bushfire solutions across Australia and New Zealand: https://descartesunderwriting.com/solutions/bushfire
