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Changes in the forestry insurance market

Geoff Manks, New Zealand Tree Grower February 2014.

The NZI brand has been synonymous with New Zealand forestry insurance over the past 30 years. They entered the market when few other insurers would, or could, and built a strong brand with a loyal client base. Deviation from their core business of the small to medium forest owners saw them take a few hits from large losses, arguably from not sticking to their knitting and being enticed by the larger insurance programmes of some big asset holders.

NZI had many years of success, so it was a shock to hear they had decided to withdraw from forestry insurance from May 2013 for intermediary business, and May 2014 for direct business. The decision to withdraw from the local market appears primarily due to a loss of local expertise to underwrite the forestry business. NZI rejected outsourcing the underwriting, instead holding the view that local risks required local people to underwrite.

Insurance options

With the vultures circling to pick over the remaining direct business from May, it is opportune to take a look at what options are around for forest owners when considering insurance.

Agricola owned by Allianz, based in Australia are arguably the next biggest forestry insurer in New Zealand, dealing with approved brokers in New Zealand. Earlier this year they produced a policy wording which, in our opinion, is left wanting in several areas.

Insurance Facilitators is a Lloyd’s backed underwriting agency with underwriting domiciled in Australia. They have three different policy wordings
in the market which are quite technical and complex. Depending on your forestry activity, you need to select the wording which is applicable to you.

Rural Affinity is owned by Great Lakes Reinsurance, which is turn is owned by Munich Re based in Australia. There is little presence observed in the New Zealand market and they have no carbon forestry policy for New Zealand.

ForestReNZ is another Lloyd’s backed agency with underwriting domiciled in New Zealand. They have one policy wording, in plain English, catering to timber and carbon forest plantations. Sage Partners are the specialist brokers for the ForestReNZ facility, providing insurance for the majority of carbon forestry activity and a growing timber plantation portfolio.

In addition to the above, QBE and Vero Insurance also withdrew from forestry insurance in the past few years. This was due in part to claims results, a lack of experienced resources to properly underwrite or manage business and a fairly small market within which to compete.

The rationalisation of viable forestry insurers is not the only aspect of this sector which has undergone upheaval in recent times. The liability insurance market has seen retrenchment by several insurers, with the end result being increases in premium for Forest and Rural Fires Act cover, as well as a withdrawal of some insurers to provide any limits under their liability policies.

In summary, what forest owners might consider when reviewing current insurance arrangements, or looking to take out insurance for their forestry activity, could be condensed into these main points −

  • Quality cover which is provided using plain English policy wording
  • Ability to offer additional perils to the basic fire cover
  • Local underwriting and local claims management
  • Flexibility to set agreed values on timber and carbon
  • Public liability with the Forest and Rural Fires Act extension
  • A rated insurance company
  • Prompt and professional service.

When you buy insurance for your forest, or liability protection, ensure it is money well spent and that your policy wording makes sense.

Geoff Manks works for Sage Partners Limited.


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