Ecological forest management a way to reduce premiums: WTW

The Nature Conservancy (TNC) and Willis Towers Watson (WTW) have published analysis that shows how ecological forest management, which reduces the risk of severe wildfires in fire-adapted forests, can be combined with insurance and significantly reduce insurance costs.

By modelling the impact on insurance of controlled burning and ecological thinning of overgrown forests, researchers at TNC and Willis Towers Watson were able to quantify insurance premium savings. In turn, these savings could be used to fund further investments in sustainable forest management.

The report finds that the practice known as ecological forestry, which includes prescribed burns and the removal of smaller trees and other vegetation in overgrown forests (i.e. thinning), leads to decreases in total insurance premiums by 41 percent for homes and a range of decreases for commercial property, while also reducing the likelihood of extreme wildfires in these communities.

The report explores how the insurance savings from ecological forestry could be captured and applied to pay debt service on bonds which would be issued to pay for ecological forest treatment. In this way, the insurance savings can contribute to funding or financing the ecological forest treatment, creating a “virtuous circle”.