Fire insurance in Sweden from an individual owner’s perspective : a cost benefit analysis

Sammanfattning: Forest insurance is seen as a management tool for preventing losses in a business. 48 percent of the forest landscape are owned by Individual owners (IO´s) and are divided into 222 000 user units. A large share of them are insured today. The aim of this thesis is to answer these questions: 1) Based on the burnt area for the past 24 years, when is it profitable, with factors from climate change and past trends of fire, to acquire forest fire insurance? 2) Based on the burnt area in the past 24 years, at which fire probability is it beneficial to acquire forest fire insurance? Results from the report were the following: 1) It is not beneficial for IO´s to acquire forest fire insurance in the next 24 years investigated in the report. 2) Profitable scenarios when acquiring forest fire insurance need probabilities of fire of at least 0.068, 0.047, 0,033, in southern, central and northern Sweden respectively. In the worst case scenario, the point at which it is beneficial to acquire a forest fire insurance is when the probability of fire becomes 30 times higher that the probability today. The results of this thesis shows that probability of fire today makes the investment of forest fire insurance a bad investment for an individual owner, based on a cost benefit analysis.