Among the 38 OECD member countries, Korea ranks fourth in terms of forest area as a percentage of total land area, following Finland (73.7%), Sweden (68.7%), and Japan (68.4%), with forests covering 62.6% of its territory. This is approximately twice the global average forest coverage rate of around 31%, indicating a relatively high proportion of forested land.

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As of 2023, the total domestic production value of forestry products reached KRW 7.13 trillion, including KRW 2.47 trillion from short-term income forest products and KRW 2.72 trillion from pure forest trees. With the continued growth of the sector, the conditions for operating insurance programs have matured, making it necessary to consider expanding coverage to include additional forestry items and to explore more efficient operational strategies.

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Although forests provide significant economic value, there is still no comprehensive insurance product in place to systematically cover the economic risks caused by wildfires. The only existing option is a forest fire insurance policy offered in the form of a special rider to fire insurance by private insurers since 1969. However, the number of annual contracts remains extremely low. This is largely due to the financial burden of premiums on small-scale forest owners, as well as a wildfire policy framework that focuses more on post-disaster recovery than on prevention, such as government subsidies for reforestation. As a result, insurance take-up rates are low, and forest insurance has not yet been widely adopted or used.

 

Countries such as Japan, China, France, and Finland offer forest insurance products that provide coverage for timber losses. In Japan, for example, a national forest insurance system is operated based on the Forest Insurance Act, and is administered by local governments and the National Federation of Forest Owners' Cooperatives. The insurance is structured on an actual loss compensation basis, using a standardized insured amount. It provides coverage for damages caused by fires and climatic disasters (such as windstorms, floods, and droughts). From 2015 to 2023, the average annual premium for this insurance was approximately 1.75 billion yen.

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In China, the uptake of forest insurance has been steadily increasing alongside the growth of the commercial forestry sector—referring to forests not owned by the state or collectives. To encourage enrollment, the government provides premium subsidies: 50% for non-commercial forests and 30% for commercial forests. In Hubei Province, for instance, the premium for commercial forest insurance is jointly covered by the central government (30%), the provincial government (25%), the county government (5%), and forest-owning households (40%). Coverage options include fire-only insurance or comprehensive policies that also cover risks such as pests and diseases, heavy rain, typhoons, and strong winds.

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In France, forest insurance provides compensation for the loss of market value of timber in the case of mature forests, while for saplings, coverage is based on their net present value (NPV). The insured perils include fire, lightning, explosions, aircraft accidents, floods, droughts, and earthquakes. In Finland, forest fire insurance is offered by private non-life insurance companies as a form of fire and natural disaster insurance, providing coverage specifically for damages caused by fire and lightning.

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However, natural disaster insurance in Korea currently focuses primarily on typhoons, floods, and other storm-related events. Although government-driven natural disaster insurance programs such as the Crop Insurance (introduced in 2001), Aquaculture Insurance (2006), and Natural Perils Insurance (2006) have been implemented, forest insurance has yet to be introduced. As previously noted, Korea has already experienced large-scale wildfires, such as the East Coast wildfire in 2022 and the Yeongnam wildfire in 2025. Given the increasing risk of wildfires due to the intensifying impacts of climate change, there is a growing need to prepare for and mitigate such threats through appropriate insurance mechanisms.

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The high economic value of forests can be more effectively preserved when forest owners and related stakeholders proactively manage and prevent risks such as wildfires. Insurance, as one of the most efficient risk management tools, enables the use of market-based pricing mechanisms to manage such risks. Therefore, from the perspective of climate change adaptation, the growing threat of wildfires underscores the increasing necessity for a forest disaster insurance system as a market-based mechanism to address and mitigate these escalating risks.

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As global warming progresses and the scale of forest fire damage continues to expand, it is essential to introduce government-driven insurance arrangements for forest fires to ensure both preventive risk management of forest resources and effective compensation for wildfire damage. To establish a forest disaster insurance system, it is necessary to develop objective standards, such as standardized insured values for timber, which serve as the basis for setting premium rates and calculating compensation. Additionally, foundational statistical data must be prepared to reflect regional differences in risk, enabling a more tailored and equitable insurance framework.