Fire is the biggest forest enemy in many countries, especially in those that have dry and hot climates.
Fire destroys biomass and makes forest production a very risky business. Forest insurance would decrease fire
risk and would contribute to make forest activities more profitable. So, insurance would increase biomass for
both reasons: by increasing forest areas and by decreasing the matter destroyed by the fire. Nowadays, in many
countries, it is not easy to find companies that want to do fire insurance for forests. The most important reasons
to explain this fact are the followings. First, in many countries, forest insurance is not mandatory, so many
farmers don’t do it. This increases the risk premium that insurance companies ask for. Second, insurance
companies need to have models based on desegregated and reliable data that allow them estimating “fair” risk
premiums. Finally, it is very difficult for insurance companies to estimate the real value of the stands (forests)
because their values vary from species to species and for the same species with the age. The main objective of
this paper is to present simple models that help to estimate “fair” insurance risk premiums, contributing in this
way to increase forest biomass
