INSURANCE
Weathering the
storms
With devastating weather events becoming more likely, and the aftermath of Storm Arwen exemplifying the challenges that companies face, Rory Gibson, of forestry and woodland insurance specialist Lycett’s, examines how a sound awareness of insurance options and pre-emptive strategies can take the financial sting out of future catastrophic onslaughts. Siting, salvaging and structuring The demand for wood has risen significantly in recent years, caused largely by the Covid-19 pandemic. The timber needs of furloughed workers eager to engage in DIY, along with supply issues and associated problems caused by HGV driver shortages, all combined to create cautious optimism within the forestry industry.1 When capitalising on this favourable climate, it is vital that those in the forestry sector are mindful of the preventable risks and the protection that is available. Before a single sapling is planted it is important to choose a site that offers the least risk should storms strike. The extensive deployment of mechanisation may have simplified access to, extraction and removal of wind-blown trees, but this still remains a major consideration. Those located on inaccessible slopes or banks will inevitably constitute revenue loss, unable to be salvaged and left to rot in situ. For landowners whose forests are at risk from storm damage, salvage retention insurance policies are an option that should be considered here. Retaining the salvage allows woodland owners to reduce their insurance burden, by only having to cover the gap between expected value and the salvage value. This is opposed to standard policies where the insurer retains the salvage and owners should insure the crops for their full market value. Legislation currently requires forest compartments to be replanted within two years of a harvest. Owners are also restricted on the percentage of a crop that can
be harvested at any given time presenting problems when it comes to trying to restructure forestry after a major wind event. Good risk management will include looking in detail at which compartments should be felled first, in order to minimise the wind exposure of those crops that remain standing. The nature of plantations can also leave them further exposed, particularly to fire. Where owners are looking to achieve natural regeneration or low-density plantations and there is far more light reaching the forest floor, creating a habitat that allows flora and fauna to flourish. From an ecological perspective, such plantations are undoubtedly a boon, but from a risk management point of view there is the risk of a greater
58 FORESTRY & TIMBER NEWS • February 2022
fuel load, increasing the likelihood of total losses. Species choice is also a key factor for those considering carbon sequestration. The government’s support of this practice, which has woodland creation projects at its heart, has certainly aroused interest in existing and prospective forest landowners. Carbon farming reduces the amount of carbon being released into the air – through a process called soil carbon sequestration – and instead, converts it into organic matter and plant material. The Woodland Carbon Guarantee (WCaG), the government’s £50 million scheme to increase rates of woodland planting, offers lucrative incentives. Landowners are given the option of selling cap-
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