CLEE, TNC, and Willis launch innovative insurance solution which takes into account the risk reduction benefit of nature-based forest treatment
The Nature Conservancy (TNC) and Willis, a business of Willis Towers Watson (NASDAQ:WTW), along with the UC Berkeley School of Law Center for Law, Energy & the Environment (CLEE), announced today a first-of-its-kind insurance policy that takes into account nature-based efforts to mitigate fire risk. Structured by Willis, the $2.5 million wildfire resilience insurance coverage has been developed for Tahoe Donner Association (Tahoe Donner), a private homeowners association in Truckee, California. The insurance is underwritten by Globe Underwriting, an internationally recognized insurer.
In collaboration with CLEE’s Climate Risk Initiative, the wildfire resilience insurance policy was developed and placed to demonstrate lower premium pricing and improved availability where ecological forest practices have taken place. Such techniques include tree thinning to improve the health and growth of the remaining trees and planned fires to clear out flammable vegetation, both proven to reduce wildfire risk and make forests healthier. Tahoe Donner was selected as the customer for the wildfire resilience insurance policy due to its cutting-edge Forest Health Management Program, which began in 1992 and evolved from efforts to create a healthy forest to mitigating climate and wildfire impacts.
Taking forest treatment into account enabled the insurer to make the insurance available in an area of the Sierra Nevada where other insurers are declining to write or renew insurance due to wildfire risk. The insurance policy price was 39% lower and the deductible was 89% lower than it would have otherwise been, as a result of accounting for the risk reduction of forest treatment in the area.
The goal of the collaboration between CLEE, TNC, Willis, and Tahoe Donner was to have an insurer write an insurance policy for the first time which explicitly accounts for the risk reduction benefit of forest treatment. And by demonstrating that an insurer—taking forest treatment into account—can make insurance available in an area facing wildfire risk and encourage other insurers to consider forest treatment in their decisions to write or renew home and business property insurance.
Dave Jones, Director of CLEE’s Climate Risk Initiative and former California Insurance Commissioner, said, “Federal, state and local governments, homeowners, homeowners’ associations and businesses are doing the right thing to reduce wildfire risk and invest in nature-based forest management. The improved price and availability of this pioneering insurance policy demonstrate that home and business insurers can and should renew and write property insurance in California and elsewhere in the United States where forest treatment is undertaken.”
Learn more about this innovative project here:
Contact: Dave Jones, davejones@berkeley.edu