Work underway to bring post-hurricane parametric protection to Mesoamerican Coral Reef

Willis Towers Watson (WTW) has launched a multinational partnership programme with the Mesoamerican Reef Fund to develop pandemic insurance solutions to help restore the Caribbean coast’s 1,000km reef system and local economies after hurricanes. The Mesoamerican Reef Insurance Programme will design and implement parametric insurance covering hurricane risk to the Mesoamerican Reef (MAR) and the communities that depend on it for protection, food security and livelihoods. Pilot coverage for key reef sites in Mexico, Belize, Guatemala and Honduras will enhance the climate resilience of almost two million beneficiaries. The Ocean Risk and Resilience Action Alliance, with funding from Global Affairs Canada, supported the insurance mechanism’s preliminary design. Payouts will be triggered by the intensity of a hurricane, and based on an estimate of the extent of damage to the reef through a novel reef risk model. A group policy will cover the pilot reef sites, with a bespoke payout structure reflecting the cost of response at each reef site at different damage levels. Mesoamerican Reef Fund will be the insurance programme’s policyholder. The project is being co-funded and implemented by WTW and the Mesoamerican Reef Fund, which is the regional financing mechanism for large-scale maintenance, conservation and restoration of the reef system. The InsuResilience Solutions Fund (ISF), managed by Frankfurt School of Finance and Management and funded by KfW Development Bank, has signed the grant funding agreement for the insurance programme. The Mesoamerican Barrier Reef System is listed as critically endangered by the IUCN Red List of Ecosystems. It is home to 65 species of coral and more than 500 species of fish, as well as many other protected marine species. Coastal wetlands, lagoons, mangrove forests and seagrass beds also protect against storms and coastal erosion. WTW said the risk of hurricanes leading to irreversible coral degradation and mortality has grown as climate change and other stresses exert pressure on the reef. “Early action to clean up the reef and jump-start regeneration and recovery is critical to reducing the overall impact of lost ecosystem services—in both social and economic terms. However, the restoration of natural ecosystems is often not a priority in the aftermath of extreme events, as resources are focused mainly on grey infrastructure and property,” it said. John Haley, WTW’s CEO, said: “Marine ecosystems may be ‘free’ public goods, but their active maintenance is essential in sustaining their health and value. This programme helps us learn how insurance can provide a unique shared governance framework to manage reefs and other vulnerable natural ecosystems.” María José González, executive director of the Mesoamerican Reef Fund, added: “This collaboration is a great opportunity for the MAR region. We see the insurance model as a risk management tool that will provide immediate funds for reef restoration, thereby contributing to strengthening coastal resilience, and to the recovery of the MAR and the environmental services it provides. MAR Fund will be the policyholder and will manage the payouts. We will work closely with national governments and other partners and stakeholders to build the needed capacities for emergency response and preparedness.”

Work underway to bring post-hurricane parametric protection to Mesoamerican Coral Reef

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