Pilot 5
Wildfire insurance enhancing adaptive actions
Pilot lead: AXA Climate
Due to the changing climate, wildfires are increasing both in Europe and worldwide. Portugal is one of the most fire prone regions in Europe which can result in significant damages and casualties. For example, in 2017 an extraordinarily intense fire season hit Portugal with a recorded total burned area of about 500,000 hectares and more than 120 human casualties . Climate conditions, ignition trigger, and vegetation cover are the key drivers of wildfire intensity and propagation.
Recent increases in wildfires and subsequent harmful consequences pushed the public authorities to react, in particular with the creation of Agency for Integrated Rural Fire Management (AGIF) whose mission is to deploy a fire management system and reduce the impacts of wildfire in Portugal. To reduce vulnerability to fires, it is crucial to address how insurance mechanisms can promote adaptation measures at different levels, and to engage with public entities in charge of deploying the National Adaptation Plans. Thus, the purpose of this pilot is to develop innovative wildfire forest insurances to incentivise adaptation measures at household and forest association levels.
The pilot begins in the central region of Portugal by identifying adaptation measures that have the potential to be combined with insurance modelling. Adaptation measures could include the construction of fire breaks and the reduction in the amount of forest biomass available to burn in the most exposed regions, which would subsequently decrease the frequency and intensity of fires, reducing the overall risk and impact of wildfires. AXA Climate will partner with AGIF to study adaptation measures and wildfire insurance models. The current wildfire models used will be analysed, and their adaptation scenarios studied, with a focus on the impacts at the forest management level and individual household level. During the next innovation rounds, we will co-design innovative insurance concepts to support wildfire prevention and management in Portugal. Finally, the replicability and transferability of the results will be studied in other European regions.