An actuarial model of forest insurance against multiple natural hazards in fir (Abies Alba Mill.) stands in Slovakia

Marielle Brunette (), Jan Holecy (), M. Sedliak, J. Tucek and M. Hanewinkel

Forest Policy and Economics, 2015, vol. 55, issue C, 46-57

Abstract: Natural hazards are the main threat for forest all over the world. Some of these disturbances may be insured such as fire and/or storm in some European countries. However, forest insurance has trouble to spread in particular because of the existence of some brakes such as the forest insurance premium, often considered as too high compared to the profitability of the forest investment. In this context, we propose an actuarial insurance model to insure multiple natural hazards (windthrow, fire, insect outbreak) in forests that determine the insurance premium in different senarios. In particular, the scenarios differ in terms of the link between the hazards, either they are mutually independent or dependent, and in terms of the parametric solutions to the actuarial problem, either a discrete time period approach or a continuous one. We propose an application of the actuarial model to a silver fir (Abies Alba Mill.) stand in the Slovak Paradise region (Slovakia). We show that gross insurance premiums range from €5.62/ha at a scale of 150,000ha at age 150, to €6312.81/ha at a scale of 15ha at age 50. In addition, we show that the most efficient solution in terms of the minimisation of the gross insurance premiums is provided under the assumption of random occurrence of mutually independent natural hazards and with a continuous time period approach.

Keywords: Actuarial insurance; Forest insurance; Random occurrence; Premium (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Working Paper: An actuarial model of forest insurance against multiple natural hazards in fir (Abies Alba Mill.) stands in Slovakia (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:55:y:2015:i:c:p:46-57

DOI: 10.1016/j.forpol.2015.03.001

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