1. Abhijeet Kumar [] 2. Arijit Das [] 3. Shomu Dey [ ]

However.300 / cubic feet (approx) . mostly dominated by trees. There are products that cover property against burglary. planting trees has been a widely-advocated way of reducing greenhouse gas concentrations in the atmosphere. and liability insurance which covers legal liabilities. One of the types of general insurance policy is Insurance of Trees. but. 1500/cubic feet (approx). against any uncertainty occurring during the lifetime of the trees. If the farmland carries two species of tree simultaneously. the policy can be taken on one sesame tree or a group of sesame tree growing in the same farmland. This insurance policy is applicable for a single tree and/ or group of trees. there are several other issues that need to be resolved before the system can be applied worldwide. There are also other covers such as Errors and Omissions insurance for professionals. if a farmland carries mango trees and sesame trees on either side of the field then. Non-life insurance companies have products that cover property against Fire and allied perils. there are policies that cover the hull of ships and so on. while that of sesame is Rs. Our insurance policy is mainly concentrating on a single tree or a group of trees of same species. then the landlord has to take two different policies because the market value of the two trees is different from each other. Seeing how future credits may be worth billions of dollars. General Insurance comprises of insurance of property against fire. GLOBAL PRESPECTIVE Over the past few years. Now. As we know. and finding ways of stimulating land owners not to cut any more forests down has been an international priority. credit insurance etc.INTRODUCTION Insurance other than µLife Insurance¶ falls under the category of General Insurance. personal insurance such as Accident and Health Insurance. theft etc. landlords or any individual / organization who is the owner of the trees. The main target customer for such insurance policies is large farmland owners. This insurance scheme is applicable to the trees pertaining to any kind. most of the rural areas are covered by vast acres of plantation. insurance companies have realized that investing in tree safety is a very profitable business. For example. the landlord has to take two separate policies because the market value of mango trees is about Rs. The non-life companies also offer policies covering machinery against breakdown. burglary etc. . as they would have to refund huge sums of money to land owners. flood storm and inundation. earthquake and so on. in order to do this. insurances must be set in place. For example. Natural occurrences such as insect plagues and lightning-induced wildfires could put insurers' backs to the wall. a carbon trade system may be implemented for forests as well.

they also release the large quantities of carbon they stored over time.92% under pasture. there is increased necessity to save & protect trees.81% under forest & 3. insurance steps in as the protector for the same. Besides the ash trees generate when they burn. fire & allied perils.09% of the land is under cultivation. The projected climate change is likely to further enhance the stress on the tree eco-systems & will adversely affect their ability to provide goods & services to the society. Poland starting December 1st.Illegal logging is also a problem.34%.directly or indirectly. About 200 million people in India depend on trees for their livelihoods . and which they use to convert light and water to oxygen and nutrients. timber extraction. where thorough control over the region cannot be established by brute force. Among them. INDIAN PRESPECTIVE If we look at the Indian scenario. through photosynthesis. which. Gujarat. provides numerous goods & services. India is rich in bio-diversity ± the country is one of the 12 mega-diversity nations. Unfortunately due to fuel-wood. . Built-up areas & uncultivated land occupy about 12. Burning forests for farming land is currently responsible for around 20 percent of all carbon emissions placed in the atmosphere. More than 190 nations will meet under UN leadership in Poznan. Rajasthan. The country has 7% of the world¶s bio-diversity & supports 16 major vegetation types. will be the implementation of a forest carbon credit.17% of the total land is uncultivated waste. which will encourage forest owners to keep them as pristine as possible. and maintains life support systems. could help their economies develop faster than they do now. Thus. 21. About 5. about 51. on account of the large sums of money they could win. in turn. tree plantation in India face continues threat of degradation. Uttar-Pradesh occupy the maximum of tree covered areas in India. The major states of India such as Andhra-Pradesh. UN officials say that poor countries in Africa and Latin America could receive very large incentives for maintaining their forests. Maharashtra. especially on those very large surfaces. So in order to save or protect the livelihood of those 200 million people in India. This insurance policy will cover the loss against any uncertainty happening due to occurrence of any of the above mentioned perils. to discuss several key issues regarding global warming and climate change. Trees are important in environmental & economic sustainability. which can be converted into agricultural land.

j) Losses caused by disease. Rock Slide. e) A deliberate act carried out by You or by any person acting with Your permission. Coverage and indemnity to insured to the extent of loss or damage to the tree/trees by operation of any one of the following perils ± a) b) c) d) Fire including forest fire and bush fire. i) Losses caused by water or moisture. thousands of hectares of trees are lost or threatened by fire every year. Public or Local Authority. k) Sunburn. .RISKS THAT ARE COVERED Fire is a natural (and unfortunately. flood and inundation Land Slide. hurricane. malicious damage. Hail is a peril over which you have no control and intense Hail strikes can lead to the death or loss of commercial viability of young trees. Storm. war or warlike activities. f) Lawful seizure. act of terrorism or any malicious damage. birds. trunks snapped. Earthquake and Drought provided the Block / Taluka concerned is declared as drought affected by the competent authority of the State Government RISKS THAT ARE NOT COVERED The following are the risks which are not covered under the policy: a) Loss or damage to tree or trees arising due to theft. insects or larvae. except when it is to avoid or reduce damage that would otherwise happen. Lightning. The policy covers tree death whether trees are uprooted. g) Loss of quality. h) Consequential loss of any kind. vermin. hailstorm. strike. confiscation or requisition by an order of any Government. cyclone. termites. pests and diseases. d) Anything nuclear or radioactive. b) Riot. c) Insects. All tree or trees are at risk of windstorm especially young trees and recently thinned areas. or stems are over-bent leading to eventual collapse. sometimes a man-made) phenomenon and despite efforts to reduce the frequency and severity of fires.

An insurance company might not wish to cover your property if you are not directly responsible for it. north-east: zone2. y These zones will be further sub-divided into other four quadrants according to the geographical directions as mentioned above. they are our main target customers. Thus. A basic requirement for all types of insurance is the person who buys a policy must have an insurable interest in the subject of the insurance.e. Their main source of income is generated from tree plantation. it is vital for the insurance company to establish that you actually have an insurable interest in the property.REQUIREMENT OF INSURABLE INTEREST When insuring your property. farm-house owners or any others who have taken the land on lease for tree plantation. south-east: zone3. In this policy. . Thus at the time of inception of the contract the policy owner has to provide a document which will provide an evidence for the ownership of the trees or the ownership of the land on which the trees are planted. it is essential for the insurance co. y And now the trees can be demarcated on the basis of their latitudinal and longitudinal degrees falling under the various quadrants. These persons can be owner of the trees. WHO WILL PAY THE PREMIUM The person having insurable interest in the object of the policy i. to demarcate the trees which are getting insured from the vast acres of farmland. there is a wide scope for the insurance companies to target the rural customers: y Farmland Owners: People who are the owners of vast acres of land engaged in tree plantation. TARGET CUSTOMER OF THE POLICY As most of the states of India where tree plantation is dominant are covered by rural sector. so you need to be the owner of the property. y Landlords: These are the people who are indirectly benefitted from tree plantation. You have an insurable interest in any property you own or which is in your possession. land-lords. y North-west quadrant: zone1. Locating trees in the farmland Farmland owners with huge acres of land growing trees all over may not insure his entire farmland. Thus. You must stand to suffer a direct financial loss if there is a claim. In such case. south west: zone4. these demarcation can be made on the basis of following. y The farmland will be divided into four zones vertically and horizontally from the centre. trees will pay the premium. the requirement of insurable interest is appropriately met as the policy is applicable to those who are the owners of the trees only.

the time when the loss or damage occurred. an estimate of the nature and extent of the damage and details of any other insurances under which you are entitled to claim for the same loss or damage. what is the profit/loss for the company.042 . What will be the premium for the policy? Premium = 1500*12 * 0.WHAT WILL THE POLICY PAY AND WHEN When any loss or damaged occurs the insurer should inform the insurance company within fortyeight (48) hours stating. Cubic Feet = [(Diameter)^2 * Height ] / 100. Taking probability of paying the claim to be 0. Total premium received= 1200*200= 240000 Prob. 1500/ cubic feet and the probability of getting damaged due to the above mentioned perils is 0.08 = 1200 Assuming the no. The probability of the product getting damaged can be ascertained by the use of various forecasting techniques. PREMIUM CALCULATION The premium will be calculated on the basis of current market value of the trees and the various probabilities associated with it. Under this policy the probability of the trees getting damaged can be ascertained by forecasting the future climate conditions and the number of trees got damaged in the previous years. the cause. of paying the claim= 0. You must give us all reasonable assistance that we may require to assess the nature and extent of the loss or damage. AN EXAMPLE: A sesame tree measuring 12 cubic feet having a market value of Rs.08.042. Expected PV of Inflows = Expected PV of Outflows Premium = (Sum Assured) *(Probability Of the Product Getting Damaged) As this policy is related to the insurance of trees the sum assured can be calculated as follows: Sum Assured = Size Of Tree * Market value Per Cubic Feet. a description of the affected plantation. of policies to be 200. historical data and other facts and figures.

protection is guaranteed for the trees. Since the group of trees are lumped ADVANTAGES OF THE POLICY TO THE INSURED a) The availability of insurance allows the transfer of some of the risks associated with farmland ownership. b) As long as premiums are paid. c) The biggest advantage of the policy is the price.Total payment of claims= sum assured*prob. DISADVANTAGES OF THE POLICY TO THE INSURED a) Premiums increase as the tree grows older. b) Coverage may terminate at the end of the term or may become too expensive to continue.ucdavis. . the premiums are usually lower. of paying the claims = 18000*200*0.042= 151200 Profit for the company= 240000-151200= 88800 Note: the values taken in the above example is just an assumption referred from the following website: http://coststudies.

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