Forestry has long sat at the margins of the insurance market, often folded into broader property portfolios and lightly scrutinised. That position is becoming harder to sustain. The class now requires a level of focus and expertise the market has not always applied, said Daniel Longden, head of forestry at Orvia Underwriting.
The sector differs from traditional property risks in one fundamental way: it is constantly changing. Trees grow, are harvested and replanted, altering the risk profile year by year. That dynamic sits alongside an exposure to catastrophe events that can erase entire areas in a single incident.
“When you look at a forest fire or a hurricane, for example, they can just flatten entire areas or burn entire areas of forestry,” Longden said. “It’s a truly cat-exposed business.”
Even neighbouring forests can behave very differently. Variations in species, management practices and geography mean that no two risks are alike. “One of my favourite things that I always say about forestry insurance is that no two submissions are the same. Everything is entirely different,” he said.
This variability complicates underwriting and limits the development of standardised data sets, helping explain why the class has remained relatively niche despite growing investor interest.
The way forestry risk is assessed has shifted markedly in recent years. Where underwriters once relied heavily on historical loss data and third-party reporting, satellite technology now offers a more direct view of exposure.
“We review a 25-year history of what’s called burn scar data: the scar map of a burn over 25 years around the plantation and the surrounding areas,” Longden said. “That has been a huge influence on the way we price, because we can see the data without relying on the client to tell the truth, or on fire associations to provide meaningful, accurate data.”
Yet improved data has not removed uncertainty. Climate change is reshaping loss patterns, rendering long-term historical data less reliable. “Traditional pricing is backward-looking,” he said. “The issue with climate change is that it’s forward-looking and getting worse.”
The response has been to shorten data windows and apply additional catastrophe loadings, particularly in regions already experiencing heightened fire and wind activity. Events once considered rare are occurring with increasing frequency. “One of the biggest things we’ve seen in recent years is that the one-in-250-year events are becoming one-in-100-year events, or even one-in-50-year events,” he said.
Despite advances in modelling, underwriting retains a strong human element. “We’ll have all the data in front of us, we’ll have looked through everything, but it comes back to the team to sit down and work out what we know about that region, what we know about the risk, and what we’re comfortable with,” Longden said.
Interest in forestry as an asset class has expanded rapidly, driven in part by carbon markets and the search for long-term, stable returns. Investors range from small landowners to large timber investment management organisations overseeing millions of acres.
“It’s an area that is drawing investment from the biggest investors around the world,” Longden said. Forestry’s appeal lies partly in its insulation from geopolitical and financial volatility. “Trees don’t fight with people. Trees don’t make people angry. People don’t want to invade someone for their trees,” he said. “It’s a very safe asset class.”
Yet insurance capacity has not kept pace. A history of poorly understood risks, often written within property treaties, has left some reinsurers wary. This retrenchment has contributed to a supply imbalance.
Many forest owners remain uninsured, with self-insurance acting as the market’s primary competitor. High-risk regions dominate the insured pool, reinforcing elevated pricing and limiting broader uptake.
Advances in technology are reshaping how forestry risks are analysed and priced. Satellite data, global weather models and internal pricing tools now allow underwriters to assess risks in regions that were previously difficult to evaluate.
Artificial intelligence has also begun to play a role, particularly in assessing unfamiliar markets and geographical locations. “AI gives you the ability to go in and really dig deep into what the actual feelings on the ground are about forestry, what regulations they have, what management practices they tend to observe, and how it behaves as an area from a forestry perspective,” he said.
Even so, he remained clear about its limits. “That final sit-down and discussion will never be replaced by technology, as it does not see the full picture,” he said.
The challenge now is less about access to better tools than the ability to use them well. Without that depth of expertise, forestry risks will continue to be misjudged or sidestepped, even as climate volatility makes them harder to ignore.
