An actuarial model of forest insurance against multiple natural hazards in fir(Abies Alba Mill.) stands in Slovakia M. Brunette a, ⁎, J. Holecy b , M. Sedliak c , J. Tucek c , M. Hanewinkel d,e a INRA, UMR 356 Economie Forestière, 54000 Nancy, France. AgroParisTech, ENGREF, Laboratoire d’Economie Forestière, 14 rue Girardet, 54042 Nancy, France b Department of Forest Economics and Administration, Technical University of Zvolen, T.G. Masaryka 24, 960 53 Zvolen, Slovakia c Department of Forest Management and Geodesy, Technical University in Zvolen, T.G. Masaryka 24, 960 53 Zvolen, Slovakia d Swiss Federal Research Institute (WSL), Zürcherstrasse 111, 8903 Birmensdorf, Switzerland e Chair of Forestry Economics and Planning, University of Freiburg, Tennenbacherstr. 4, 79106 Freiburg, Germany abstract article info Article history: Received 25 September 2014 Received in revised form 29 January 2015 Accepted 4 March 2015 Available online 20 March 2015 Keywords: Actuarial insurance Forest insurance Random occurrence Premium Natural hazards are the main threat for forest all over the world. Some of these disturbances may be insured such as fire and/or storm in some European countries. However, forest insurance has trouble to spread in particular because of the existence of some brakes such as the forest insurance premium, often considered as too high compared to the profitability of the forest investment. In this context, we propose an actuarial insurance model to insure multiple natural hazards (windthrow, fire, insect outbreak) in forests that determine the insurance premium in different senarios. In particular, the scenarios differ in terms of the link between the hazards, either they are mutually independent or dependent, and in terms of the parametric solutions to the actuarial problem, either a discrete time period approach or a continuous one. We propose an application of the actuarial model to a silver fir(Abies Alba Mill.) stand in the Slovak Paradise region (Slovakia). We show that gross insurance premiums range from €5.62/ha at a scale of 150,000 ha at age 150, to €6312.81/ha at a scale of 15 ha at age 50. In addition, we show that the most efficient solution in terms of the minimisation of the gross insurance premiums is provided under the assumption of random occurrence of mutually independent natural hazards and with a continuous time period approach. © 2015 Elsevier B.V. All rights reserved. 1. Introduction Natural disturbances are one of the major threats for forests world- wide. In the USA, Hurricane Katrina damaged 5 million acres in 2005, and the 2007 wildfire in South Georgia destroyed some 550,000 acres. In Europe, natural hazards damage an average of 35 million m 3 of wood each year (1950–2000). Storms are responsible for 53% of these damages, fires for 16% and biotic factors for 16%, respectively (Schelhaas et al., 2003). Climate change will have a serious impact on these disturbances. The occurrence of harmful disasters such as drought, flooding, wind and fire is assumed to be on the increase (Flannigan et al., 2000; Fuhrer et al., 2006; Fleischer et al., 2009; Skvarenina et al., 2009). The effects of climate change may strongly affect the economic productivity of European forests (Hanewinkel et al., 2013). Since 1999, three major storms (Lothar and Martin in December 1999 and Klaus in January 2009, respectively) have caused severe damage in European forests (Gardiner et al., 2011). However, consequences are also visible in terms of biotics. It is predicted that populations of pests such as bark beetles and the frequency of the outbreak of tree diseases will intensify (Williams and Liebhold, 1995). Trees will be more sensitive to fungal pathogens since the process of sporulation and colonisation will be more effective (Desprez-Loustau et al., 2007). Climate change may also favour the establishment of exogenous pathogens. Finally, tree stress combined with the introduction of new pathogens is likely to increase health risks in forests. Such natural disturbances represent multiple potential losses both for forest owners and society. Forest owners may suffer losses linked to the current value of felled timber resulting from the loss of market- ability, decreases in the future value of the trees that have to be harvest- ed at a premature stage, the additional cost of forest restoration, as well as losses in other income such as hunting leases and regular income due to gaps in future wood production resulting in cash flow or liquidity problems (Birot and Gollier, 2001; Picard et al., 2002). Moreover, in addition to timber-related economic losses, the crisis following the occurrence of such events is also associated with high public costs, e.g., the amount of human and material resources that are needed to fight fires (Pinheiro and Ribeiro, 2013). Other losses may include loss of carbon sequestration (Thürig et al., 2005) and amenity losses. Conse- quently, a main issue is how to cope with such risks. Several options including cause-oriented measures such as prevention activities or effect-oriented measures like insurance are available. Forest Policy and Economics 55 (2015) 46–57 ⁎ Corresponding author. E-mail address: Marielle.brunette@nancy.inra.fr (M. Brunette). http://dx.doi.org/10.1016/j.forpol.2015.03.001 1389-9341/© 2015 Elsevier B.V. All rights reserved. Contents lists available at ScienceDirect Forest Policy and Economics journal homepage: www.elsevier.com/locate/forpol