Pilot 4
Forest insurances against windthrow risks
Pilot lead: AXA Climate
Insurance is a risk transfer solution which can compensate financial losses of forest stakeholders following climate disasters, while encouraging landowners or forest managers to invest in risk reduction and adaptation measures. This pilot aims to actively engage forest owners and other key stakeholders in exploring existing forest insurance products and designing new innovative insurance covers that also consider evolving climate risks and implemented adaptation measures, focusing on windthrow risks.
Windstorms account for approximately 50% of all reported
forest disturbance damage in Europe between 1950 and
2019. Yet only 1-5% of Germany's forest area is insured
against this risk. This pilot, led by AXA Climate, set
out to close that gap by designing and validating an
innovative, climate-sensitive insurance solution for
windthrow—one that reflects actual forest vulnerability
and delivers fast, transparent payouts.
The first phase of the pilot focused on building a
use-case of climate insurance for forests in Germany by
working together with a private forest owner Forst
Arco-Zinneberg through six co-design workshops to scope
risks and develop first modelling concepts. It involves
identifying significant weather-related risks for the
plots, comparing those to currently available products,
and understanding the non-insured local partner's
interest for various types of insurance covers. AXA
Climate partnered with AXA Germany and Arco-Zinneberg to
understand the perceived risks and primary
considerations for the local context, and windthrow was
rapidly identified as the dominant and most insurable
peril. Based on this initial scoping exercise, different
scenarios of insurance design were then explored,
studying both indemnity and parametric insurance
structures, with variations in the degree of risk,
triggers, and insured value.
From there, the team built two core technical
components: a stand-level forest vulnerability map,
using machine-learning clustering of characteristics
such as species composition, canopy height, tree
density, and topography; and a Wind Power Exposure Index
(WPEI), integrating wind intensity, direction, and storm
duration. Together, these can be utilized for the
estimation of expected storm damages at a forest-stand
level, and support insurance product development and
pricing. This combined framework was validated across
regions in Germany, France, Ireland, Scotland, and
Denmark. Indicative pricing simulations produced a
premium of approximately 5 €/ha/year for an insured
value of 1,000 €/ha, which is broadly aligned with the
observed willingness-to-pay levels for forest insurance
in Europe.
The framework developed under PIISA demonstrates that
wind risk for forests can be quantified, priced, and
insured in a scalable way. The WPEI modelling
architecture uses globally available ERA-5 Land data,
making it deployable across Europe without structural
redesign, though regional calibration remains essential
to tailor the index to different biogeographic regions
and calibrate it with local back-testing against
historical events.
Read more
Other written outputs
- Blog - Quantification of forests adaptation measures for insurance application
- Info Card - Nature-Based Solutions in the Center of Climate Adaptation
Watch more
- Webinar - Adaptive Forest Management and Policy to Tackle Climate Risks
- Webinar – Climate resilient natural resources management