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Scaling climate-sensitive forest insurance in the EU: German pilot

PIISA Germany Windthrow Pilot: an innovative solution to close the protection gap 

  • 1 - 5%

    of German forests insured against windthrow

  • 50%

    Windstorm accounts for almost 50 % of all forest losses in the EU from 1950–2019 

  • 2023-2026

    Implementation timeline

Solutions

The PIISA (piloting innovative insurance solutions for adaptation) project is a Horizon Europe-funded, three-year initiative that brings together 12 partners from five EU Member States to develop and pilot innovative insurance solutions that incentivise climate adaptation measures. Under the leadership of AXA Climate, the windthrow pilot addresses windstorm risks, the largest contributor to forest loss in the EU at approximately 50% of all reported disturbance damage between 1950 and 2019. With only 1–5% of Germany’s forest area insured against this risk, the pilot aims to close the protection gap by designing, testing and validating a climate-sensitive insurance solution for windthrow risks through close collaboration with forest owners, insurers and technical partners. The framework has been tested across Denmark, France, Germany, Ireland and Scotland, demonstrating technical robustness and replicability. Key solutions produced by the German windthrow pilot include the following.

  1. Forest vulnerability map: Incorporates stand-level characteristics such as canopy height, cover, tree density, elevation, wind exposure and slope, refined using machine learning clustering techniques with model design allowing for updates based on client-specific data availability. 
  2. Wind power exposure index (WPEI): Built on Copernicus ERA5-Land data, this index provides transparent and replicable climate inputs combining wind speed, wind direction and storm duration to estimate potential windstorm impacts on forest assets. 
  3. Windthrow insurance prototype: A climate-sensitive insurance solution that combines hazard modelling, stand-level vulnerability assessment and actuarial pricing to provide credible, affordable coverage against windstorm damage with fast, transparent payouts.

Co-benefits

Economic

The Germany windthrow pilot aims at achieving several economic co-benefits beyond direct risk coverage. Adaptation measures such as species diversification and structural heterogeneity provide economic value on their own, reinforcing a complementary relationship between adaptation and insurance. The proposed hybrid insurance structure combines index-based pricing with loss assessment, seeking to bridge the gap between product feasibility and attractive pricing. Model outputs serve as risk management tools that help clients make informed coverage decisions. Finally, the insurance can secure cash flows that can complement or compensate for emergency funding, enabling restoration efforts that sustain the long-term economic viability of forestry operations.

Social

The Germany windthrow pilot generates social co-benefits through its stakeholder engagement process and its contribution to livelihood security. The co-design approach, involving six structured workshops with forest owners, insurers and technical experts, fosters trust and ensures the acceptance and relevance of the insurance solution among end-users. Additionally, by securing cash flows for forest recovery and sustaining timber production, the pilot can indirectly protect the livelihoods of forest owners, workers and communities whose economic well-being depends on forestry activities, contributing to the resilience of rural economies exposed to increasing climate risks.

Environmental

The insurance solution can incentivise adaptive forest management practices such as species diversification, structural heterogeneity and uneven age stands, which provide direct ecological benefits beyond risk reduction. By securing cash flows for post-storm recovery, the pilot could support long-term forest ecosystem resilience, helping maintain the carbon sequestration capacity threatened by climate driven disturbances. Additionally, the model promotes sustainable forestry practices that preserve forest ecosystem services including biodiversity and habitat integrity.

Replicability

Replicating the windthrow model across the EU with regional calibration and insurer engagement 

Best suited for

The replication of the Germany windthrow pilot is best suited for insurance companies willing to integrate the model outputs into their underwriting practice, combined with entities that have access to harmonised forest inventory data and reliable windstorm records. Successful replication requires partners capable of conducting regional calibration and ground-truth validation using historical storm events before any product contractualisation, as replication without local calibration significantly reduces accuracy. The framework can be deployed across EU forested areas with comparable forest and storm characteristics, since the WPEI uses globally available ERA5-Land data, though adaptation to local ecological and regulatory contexts remains essential. 

Stakeholders' role

The Germany pilot developed its solutions through close collaboration among insurers, private forest owners, climate-service providers and technical partners, assuring their engagement in co-design workshops. To replicate the solution elsewhere, continued collaboration between insurers, forest owners, public authorities and climate service providers is required. Successful replication depends on insurer engagement to integrate model outputs into underwriting, access to harmonised forest inventory and stand-level data, and local actors to conduct regional calibration and ground-truth validation before contractualisation. 

Built-in scalable tools

The key replicable elements include the WPEI, built on globally available ERA5-Land data requiring no structural redesign, and the forest vulnerability index, which incorporates stand-level characteristics. The combined modelling architecture integrating hazard, vulnerability and actuarial simulations is designed for scalability across EU regions with comparable forest and storm characteristics. The historical hazard component of the WPEI can also be deployed independently as a climate service. These technical components are transferable, though they require integration with local forest inventory data and regional ground-truth calibration to maintain accuracy in new contexts. 

Funding pathways

The PIISA project was funded through Horizon EU under grant agreement number 101112841.