Hurricane Lisa triggers Mesoamerican Reef parametric cover

A parametric insurance cover designed to protect the largest barrier reef in the Atlantic Ocean has been triggered by hurricane Lisa. The Category 1 hurricane event triggered the first payout of the Mesoamerican Reef (MAR) insurance programme to immediate reef recovery and restoration finance in Belize. Hurricane Lisa hit the Turneffe Atoll, off the coast of Belize, triggering a $175,000 payout under the programme’s parametric policy, which was developed by the MAR Fund and WTW’s climate and resilience hub. WTW explained that the programme, which was launched in 2021, uses a pre-arranged, trigger-based financing approach to support rapid reef response following damaging hurricane events across the critically endangered 1,000km reef system. María José González, executive director of MAR Fund, said: “As a private environmental fund, MAR Fund supports regional access to the right kinds of financial tools, which provide funding when it is most needed. This payout will fund reef repair and build long-term resilience of the ecosystem and the people it supports.” According to WTW, hurricanes are now a leading driver of coral loss in the region but without dedicated budgets, reef response is difficult to mobilise in the aftermath of extreme events. The parametric policy, underwritten by AXA Climate and Munich Re and placed by WTW’s alternative risk transfer team, covers seven key coral reef sites of the largest barrier reef in the Atlantic Ocean across Mexico, Belize, Guatemala and Honduras. Dr Annette Detken, head of the InsuResilience Solutions Fund, which helped finance the programme, said: “We are pleased to see the mechanism working and seek to further strengthen the application and impact of prearranged, trigger-based financing, especially for fragile ocean and coastal ecosystems such as coral reefs. We hope that parametric disaster risk finance can help unlock resources to sustain the resilience of communities and economies against climate change.” WTW confirmed that when hurricane Lisa passed through Belize’s Turneffe Atoll at Category 1 strength, wind intensity reached 70 knots, meeting the policy conditions and triggering the $175,000 payout. The payout is expected to reach MAR Fund’s emergency fund within 14 days of the event. Rowan Douglas, head of the climate and resilience hub at WTW, said: “WTW is proud to be a part of the team delivering this financial innovation to the MAR region. The MAR insurance programme ensures funding is available for reef restoration, supporting the long-term health of this crucial yet highly threatened piece of natural infrastructure. It also demonstrates the much wider role that insurance can play in ecosystem resilience, conservation financing and strengthening the economic opportunities of local communities in the face of loss and damage from both shock and slow-onset climate hazard.” Antoine Denoix, CEO of AXA Climate, added: “Hurricane Lisa is an unfortunate reminder that climate change is devastating coral reefs worldwide. For AXA Climate, exploring parametric insurance solutions is crucial to enhancing the resilience and regeneration of our natural ecosystems. Today, we are pleased to take part in providing fast financial recovery for science-based restoration and maintenance of the Mesoamerican Reef. This innovative financial mechanism changes the way we care for and protect natural assets, while supporting local communities and economies that depend on them.”

Hurricane Lisa triggers Mesoamerican Reef parametric cover

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