Australia's escalating bushfire risk means forestry plantations, sawmills and other high-risk industries are struggling to find insurance cover and are facing higher deductibles and sub-limits, according to Descartes Underwriting.

The insurer's warning comes as the Australian and New Zealand Council for fire and emergency services (AFAC) identifies increased bushfire risk across northern and southeastern NSW, southeast Queensland, northeastern Tasmania and parts of WA, SA, Victoria and the NT. 

Australia’s forestry and timber industry is a particular concern. 

Descartes head of business development, Australia & New Zealand, Lynn Roehrig, says businesses with plantations, nurseries and properties in high-risk zones are seeking additional capacity where conventional insurance limits are insufficient. 

Sawmills are another exposed part of the timber value chain and can face particular challenges because they are commonly located close to plantations and forests to reduce transport costs and maintain access to timber supplies. 

“Depending on the location of the mill, many property underwriters effectively treat mills as a no-go zone,” Mr Roehrig says. 

The forestry industry faces potential losses extending beyond physical damage, with fires threatening replanting costs, future revenue and investments linked to carbon credits. Sawmills and other businesses can also experience supply chain disruption, business interruption and recovery expenses. 

Descartes offers parametric wildfire insurance as an alternative or supplementary layer of protection. Rather than assessing the precise financial loss following a fire, parametric policies pay when an agreed trigger is met, using independently verified data such as satellite imagery. 

For property risks, the insurer can establish a predefined radius around an insured asset, typically 100 metres, and use satellite data to determine whether a wildfire has entered the agreed zone. The trigger can cover physical damage and associated business interruption costs. 

For plantations, satellite imagery can be used to monitor damage over time, including trees that initially survive a fire but subsequently deteriorate and die. 

Descartes says its parametric wildfire solutions can provide up to $80 million in cover per contract, with applications extending to alpine resorts, renewable energy, hospitality, viticulture and carbon credit investments. 

Mr Roehrig says the firm is providing cover “to an industry that often struggles to access adequate insurance capacity through conventional channels”.