FAQs
- How does ForestRe differentiate itself from other forest underwriters?
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We are the only forest-only agency-type of organisation, led by individuals with 25 years experience of forestry and crop risk assessment (frequency and severity) and insurance product design. We have ‘cut our teeth’ on performing forest risk surveys all over the world and have many direct links with the sector.
This enables the team to provide expert service to clients that is broader and deeper than any other forestry capacity provider to be found among general reinsurers that insure forestry.
- Is ForestRe a Lloyd’s broker?
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No. From February 1st 2008 ForestRe has entered into a line slip agreement with four Lloyd’s Syndicates of the London Market. Through this Agreement, ForestRe can provide a significant new insurance and reinsurance portfolio for the world’s forest markets.
At present all accounts are prior submit to the lead syndicate (Ascot) before quoting. Benfield Group administers the Lloyd’s facility that is available to all Lloyd’s registered brokers.
- Which syndicates provide capacity for ForestRe?
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Ascot: www.ascotuw.com
Chaucer: www.chaucerplc.com
Hiscox: www.hiscox.com
Talbot: www.talbotuw.com
- What are the accumulation zones?
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- Per Location: 25km grid (625 square kilometres) USD 5M Inter-boundary low & high risk
- Per Zone: 100km grid (10,000 square km) USD 10M Inter-boundary high & low risk zones
- Per Zone: 250km grid (62,500 square km) USD 20M Inter-boundary high risk zone
- Per Zone: 250km grid (62,500 square km) USD 30M Inter-boundary low risk zone
- How do the accumulation zones work?
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ForestRe operates on the basis of forestry sum insured limits and/or limits of liability per risk, per location and per zone as defined. Thus, for any one forestry risk per location, defined as a grid area of 25 km x 25 km, ForestRe can write a maximum share (line size) for account of US$ 5 million.
For example, if a forest plantation in a single location has a total sum insured of US$ 15 million, we could accept a maximum share, sum insured basis, of US$ 5 million (33% of the total sum insured).
However, if the $15 Million Forest was spread over 2 separate locations (non-overlapping 25 x 25 km grids) say a US$7.5m location 1 and US$7.5m location 2, ForestRe could elect to write to our maximum sum insured limit of US$5m in location 1 (67% share of US$7.5m) and US$5m in location 2.
- What insurance does ForestRe product cover?
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- Fire
- Fire fighting expenses
- Wind: Not available in 2008, save on a special case-by-case basis.
- Enterprise risk (credit, political and liability through its insurance partners) can be processed through associates of ForestRe
- Who are the typical clients for ForestRe insurance products?
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ForestRe offers fire and tailor-made insurance products to:
- small and medium sized forest enterprises
- timber investment management organisations (TIMOs)
- real estate investment trusts (REITS)
- forestry management organisations (FMOs)
- forestry investment funds and institutional investors
- forest communities and out-growers for pulp & paper factories or other processors (oil palm typically)
- pulp and paper corporations
- national and local governmental institutions
- Deductibles?
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- As a minimum deductibles are set to remove about 95% of fire events. In forestry about 80% of area lost is in the largest 2% of fire events.
- The basic deductible will thus vary from area to area with tree type and environment and management.
- Of course any insured may chose to have a larger deductible that will help reduce the premium cost.
- Typically for small forest owners we would expect a basic deductible to be between 2 and 20 hectares.
- Larger forestry businesses should consider reasonably large deductibles where they are confident that they can spot and fight fires efficiently. They will be concerned with the catastrophic fire event rather than every fire that occurs.
- First Loss?
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- First loss limits are set normally at the limit of all expected annual aggregate losses.
- Typically this would be the value of about 3,300 hectares for that insured. Some may want US$10m (say about 5,000ha). Few fires ever exceed this area destroyed (net of salvage) by individual owner (insured). Therefore it is not necessary to buy ‘full-value’ cover.
- There are forest/plantation fires that are bigger, but these will tend to have multiple owners.