Why can't we insure trees?

Summary

Podcast Summary: The Indicator from Planet Money Episode: Why Can't We Insure Trees?
Release Date: July 7, 2025
Host: Waylon Wong
Guest: Ellie Katz, Interlaken Public Radio, Michigan

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Introduction and Context

In the July 7, 2025 episode of The Indicator from Planet Money, host Waylon Wong explores a pressing yet overlooked issue in the agricultural and forestry sectors: the lack of insurance for standing trees. The discussion is framed against the backdrop of a devastating ice storm that struck northern Michigan earlier that spring, causing unprecedented damage to millions of acres of forest land.

Impact of the Ice Storm on Michigan's Forests

Ellie Katz, representing Interlaken Public Radio in Michigan, sets the scene by detailing the severity of the ice storm. She recounts, "It was like the worst ice storm we've had since 1922. There were power lines coming down, trees coming down. It was pretty bad." ([00:29])

Waylon adds, "Over a million acres of forest land were damaged. The pictures looked like the tops of all the trees just got sheared off" ([00:36]), highlighting the extensive nature of the devastation. The storm left many trees resembling matchsticks, drastically altering the landscape and impacting those who depend on these forests for their livelihoods.

Interview with Dale Forester: A Maple Producer’s Struggle

Ellie Katz introduces Dale Forester, a maple syrup producer from Atlanta, Michigan, whose family has been in the business for generations. Speaking immediately after the storm, Dale assesses the damage: "This tree here possibly will make it, but the one back there won't make it. So I would guess, you know, we're pretty close to 50% just showing you trees here that aren't going to make it" ([00:57]).

Dale expresses his profound connection to his work and the trees, stating, "I tell people, this one here, God's on top. My family, my trees, and then everybody else, I think of my trees" ([03:43]). His sugar house, a central hub for syrup production, showcases the tangible losses, yet his facilities and equipment remain insured, unlike the trees themselves.

The Insurance Gap for Trees

The core issue discussed is the absence of insurance coverage for standing trees and their taps. Despite insuring buildings, equipment, and finished products, tree owners like Dale face significant financial losses without insurance support. Before the ice storm, Dale owned approximately 10,000 tappable maple trees, valued at around $600,000. Post-storm estimates pegged the property value at roughly $350,000, a stark decrease attributed solely to irreversible tree damage.

Ellie elaborates, "There's no insurance payout to help him with that" ([04:18]), underscoring the precarious financial situation for tree-dependent businesses and landowners.

Challenges in Implementing Tree Insurance

Waylon and Ellie delve into the broader implications of uninsured timberlands in the U.S. They note that approximately 60% of Michigan's timberland is privately owned, and this trend scales nationally, leaving hundreds of millions of acres of timberland vulnerable. Even fruit trees lack comprehensive insurance, with only the fruits themselves being covered.

Ellie mentions, "I called up landowners and forestry consultants and insurance agents and kept getting the same responses like, I've never thought about this before, or I've never even heard of that idea" ([04:43]), highlighting the lack of awareness and existing market structures that exclude tree insurance.

Dawei Zhang, a forest economics student from Auburn University, provides insight into the economic barriers: "Premiums were low enough, landowners would be willing to pay for timber insurance. But the market rate is much higher than that, like anywhere from 0.5% to 1%" ([05:44]). Applying this to Dale’s situation, the cost would have been significantly higher than what landowners are willing to pay, creating a disconnect that hinders the adoption of tree insurance.

Moreover, Valuing standing trees presents another challenge. Michael Hosmar from Fisher Investments explains, "For forest, it's different species, different locations. And as trees grow, they change in value every year. Not to mention certain types of lumber are more valuable than others, and that's constantly changing" ([06:59]).

International Models and Potential Solutions

Despite these challenges, the episode highlights that tree insurance is feasible, citing examples from countries like China, France, Germany, Norway, and Finland where tree insurance exists.

Ellie outlines two primary models:

1. Government Intervention:
   After severe cyclones in 1999 and 2009, France mandated forest owners to purchase insurance, creating a structured market that balances premiums and demand. Similarly, China’s government stepped in to establish a market where none existed, ensuring more affordable premiums through regulation.

2. Cooperative Models (Nordic Model):
   In Norway, Finland, and Sweden, timberland owners formed cooperatives that collectively negotiate premiums and guarantee insurance companies a solid customer base. This collective bargaining power helps reduce costs and streamline the insurance process.

Waylon notes, "Climate scientists are predicting more extreme weather events like this one in Michigan on the horizon, and maybe that'll get more people thinking about tree insurance" ([08:44]). However, Dawei remains skeptical, believing that such events alone won’t sufficiently drive down premiums to encourage widespread adoption.

Future Outlook and Relief Efforts

In the absence of available insurance, landowners like Dale Forester are seeking alternative forms of relief. Dale shares his plans: "We're going to plant some maples and we're going to plant some pines. Not that I'm a pine tree person. But we're going to plant some maples" ([09:07]). This reforestation effort aims to restore his maple pipeline capacity and ensure long-term sustainability.

Additionally, there has been progress in insurance coverage for specific components. Dale mentions that Michigan insurance agencies have started reimbursing for his maple lines—the plastic tubing in the woods that transports sap ([09:26])*—a small but significant step towards mitigating future damages.

Conclusion

The episode concludes by highlighting the urgent need to address the insurance gap for trees, especially as climate change induces more frequent and severe weather events. While international models offer pathways, the U.S. must navigate its unique challenges to create viable tree insurance solutions. In the meantime, producers like Dale Forester continue to seek relief and adapt to ensure their livelihoods and the health of Michigan’s forests.

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Notable Quotes:

• Dale Forester on tree survival: "This tree here possibly will make it, but the one back there won't make it. So I would guess, you know, we're pretty close to 50% just showing you trees here that aren't going to make it." ([00:57])

• Dale Forester on priorities: "I tell people, this one here, God's on top. My family, my trees, and then everybody else, I think of my trees." ([03:43])

• Dawei Zhang on insurance premiums: "Premiums were low enough, landowners would be willing to pay for timber insurance. But the market rate is much higher than that, like anywhere from 0.5% to 1%." ([05:44])

• Michael Hosmar on valuation challenges: "For forest, it's different species, different locations. And as trees grow, they change in value every year. Not to mention certain types of lumber are more valuable than others, and that's constantly changing." ([06:59])

• Ellie Katz on international insurance models: "Countries like China, France, Germany, Norway and Finland, they all have tree insurance." ([07:41])

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Produced by: Julia Ritchie
Engineering by: Kwesi Lee
Fact-checked by: Tyler Jones
Edited by: Cake and Cannon
Production: NPR

Transcript

[Ellie Katz]

Npr.

[Waylon Wong]

This is the indicator from Planet Money. I'm Waylon Wong, and here with me is Ellie Katz from Interlaken Public Radio in Michigan. Hello, Ellie.

[Ellie Katz]

Hi, Waylon. Good to be here.

[Waylon Wong]

Great to have you. And, Ellie, you are in northern Michigan, which I remember had a really bad ice storm earlier this spring.

[Ellie Katz]

Yeah, it was like the worst ice storm we've had since 1922. There were power lines coming down, trees coming down. It was pretty bad.

[Waylon Wong]

I remember just the scale of it was wild. Over a million acres of forest land were damaged. The pictures looked like the tops of all the trees just got sheared off.

[Ellie Katz]

They look like matchsticks. It's pretty crazy. And that is in a really heavily forested part of the state. And some people there rely on those trees for their livelihood. I went to talk with someone like that. His name is Dale Forester.

[Waylon Wong]

Oh, man. I bet he's heard all the jokes.

[Ellie Katz]

Yeah. Yes. And Dale is a maple producer in Atlanta, Michigan. We talked right after the storm outside his sugar house, which is where he boils maple SAP down into syrup and sugar.

[Dale Forester]

This tree here possibly will make it, but the one back there won't make it. So I would guess, you know, we're pretty close to 50% just showing you trees here that aren't going to make it.

[Ellie Katz]

Dale's really proud to be a maple producer. It's been in his family for generations. So this storm was really, really hard.

[Waylon Wong]

Now, in many other situations where a business owner has been hit by a disaster, they have insurance, but that is.

[Ellie Katz]

Not the case with standing trees like sugar maples.

[Waylon Wong]

Today on the show why trees aren't insured like other crops and what it would take to get that insurance. With extreme weather events like this one on the rise.

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[Ellie Katz]

There's one main room in Dale Forester's sugar house in Northern Michigan where all the magic happens.

[Dale Forester]

So this is where we actually make the syrup. In this room here, we bottle in the basement, but we. This is. So this is our evaporator, and then this is our cathedral ceiling.

[Michael Hosmar]

Wow.

[Ellie Katz]

It's tall and open and built with lumber from old maple trees. And the evaporator he's talking about takes up almost the entire room. It's this huge metal machine with all sorts of tubes and wires and knobs.

[Waylon Wong]

And buttons, and that is insured. Dale's equipment, his buildings, his final maple syrup products, even his bottles, they all.

[Ellie Katz]

Have insurance, but the trees themselves and the taps on them are not insured. And none of his business exists without those trees.

[Dale Forester]

I tell people, this one here, God's on top. My family, my trees, and then everybody else, I think of my trees.

[Ellie Katz]

Before the storm, dale had about 10,000 tappable maple trees. Those together were a huge asset.

[Dale Forester]

I felt like this property was worth about 600,000 completely set up, and now it's probably worth 350 at the most. I mean, that's just a fact.

[Ellie Katz]

Dale's 65. He told me his retirement savings will probably have to go towards replacing taps damaged in the woods and buying a whole new stand of maple trees. And. And there's no insurance payout to help him with that.

[Waylon Wong]

And this insurance issue doesn't just affect maple trees. We're talking timber companies, even big ones like Weyerhaeuser don't have it. But you've also got smaller private land owners who own 20 or 40 acres of woods. They manage those woods for timber, then harvest and sell it for profit every few decades. And they can't get insurance either.

[Ellie Katz]

There's a lot of people like that. About 60% of Michigan's timberland is privately owned.

[Waylon Wong]

Expand that to the hundreds and hundreds of millions of acres of privately owned timberland in the US and we're talking a lot of timber that isn't insured. Even most fruit trees aren't insured. Just the fruit is.

[Ellie Katz]

I called up landowners and forestry consultants and insurance agents and kept getting the same responses like, I've never thought about this before, or I've never even heard of that idea. But people have been wondering about timber insurance for a while. Dawei Zhang studies forest economics at Auburn University in Alabama.

[Michael Hosmar]

Actually, back in the 1930s, Congress asked the Department of Agriculture to do a study on the timber insurance because of a fire, because of a storm, and because of insects and disease.

[Ellie Katz]

And 90ish years later, it's still not really a thing.

[Waylon Wong]

That's because there's just no market for tree insurance in the U.S. daoue studied this and he says while there's no market, there is demand. Premiums were low enough, landowners would be willing to pay for timber insurance.

[Ellie Katz]

And he says that magic premium number, what people would be willing to pay for is right around 0.2 or 0.3% of their property value. But the market rate is much higher than that, like anywhere from 0.5% to 1%.

[Waylon Wong]

Okay, so let's apply those numbers to Dale's maple farm and insurance costs for last year. He could have been willing to pay the top end of that range we talked about. So 0.3% on the 600 value of his farm pre ice storm would come out to $1,800, but the market rate would have been $6,000.

[Ellie Katz]

Maybe that doesn't seem like that much. But trees take years to grow and then harvest. It's decades before you see a paycheck. Meanwhile, Dawei says you've been paying a high annual insurance premium over all those years. Dale's maple trees, for example, take 40 or 50 years to even be big enough to start tapping.

[Waylon Wong]

And then there's the cost of actually valuing standing trees.

[Michael Hosmar]

When you have a house, standard house, four bedroom, five bedroom, whatever, in certain neighborhood, the property value is pretty much no. But for forest, it's different species, different locations.

[Waylon Wong]

And as trees grow, they change in value every year. Not to mention certain types of lumber are more valuable than others, and that's constantly changing. During the pandemic, there was a premium on evergreen trees like pine and cedar. So their value, so this kind of.

[Michael Hosmar]

Thing is there's less of statistical evidence for the insurance company to collect, to justify, to judge, okay, what is exactly the damage, what species we're talking about and how much is damage we're talking about. That's why their price premium is so high.

[Waylon Wong]

So we're stuck in this endless cycle of high premiums and low demand because of those premiums and no growth of the market.

[Ellie Katz]

But it's not impossible. Countries like China, France, Germany, Norway and Finland, they all have tree insurance.

[Waylon Wong]

And there's basically a couple ways to make this happen. In the first case, you have France, big cyclones in 1999, and then again in 2009 shredded forests there.

[Michael Hosmar]

After that, the French government basically says forest landowners, you have to pay insurance.

[Ellie Katz]

A similar thing happened in China. The government created a market when supply and demand don't meet. Government intervention can help reduce premiums and balance things out.

[Waylon Wong]

But government intervention can come at a cost. Here on the indicator we've reported on how government intervention and subsidies can distort the market and create a moral hazard. You know, farmers may take on bigger risks if they know they won't have to carry the cost if they fail.

[Ellie Katz]

True. But you know, there is one other model for tree insurance. I'm going to call it the Nordic model. In Norway, Finland and Sweden, timberland owners formed big cooperatives that negotiated premiums on behalf of landowners and guaranteed insurance companies lots of buyers.

[Waylon Wong]

Climate scientists are predicting more extreme weather events like this one in Michigan on the horizon, and maybe that'll get more people thinking about tree insurance. But Daowei at Auburn University doesn't believe it will move the needle enough to lower premiums.

[Ellie Katz]

In the meantime, Dale Forester and other Michigan maple producers are applying for relief from the usda, including some money for reforesting their land.

[Dale Forester]

I guess we're going to plant some maples and we're going to plant some pines. Not that I'm a pine tree person.

[Michael Hosmar]

But we're going to plant some maples.

[Waylon Wong]

You can't put pine tree syrup on your waffles.

[Ellie Katz]

No chance. But 20 years from now, Dale can.

[Waylon Wong]

Sell some pine and then 20 years after that, his maples will be back to full maple topping capacity.

[Ellie Katz]

Exactly. That's the idea. And Dale and other maple producers are going to get a little help right now. They advocated for their insurers to reimburse them for their maple lines. That's all the plastic tubing in the woods that brings SAP from the trees to the place where it gets boiled.

[Waylon Wong]

Those weren't insured before. Now a few Michigan insurance agencies are paying for some of those lines, which will help soften the blow from those ice storms. Ellie Katz, thanks very much for bringing us this story.

[Ellie Katz]

Thanks, Waylon.

[Waylon Wong]

This episode was produced by Julia Ritchie with engineering by Kwesi Lee. It was fact checked by Tyler Jones. Cake and Cannon edits the show and the indicator is a production of NPR.

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