WTW has expanded its programme insuring the Mesoamerican Reef with the appointment of Munich Re and AXA Climate as the insurance capacity providers for the project, in a bid to boost the economic and climate resilience of the surrounding regions.
The Mesoamerican Reef Fund (MAR Fund) is a multinational collaboration that will design and implement parametric insurance cover to protect the Mesoamerican Reef from hurricane risk.
The Mesoamerican Reef, the “jewel of the Caribbean”, lies within the Caribbean Sea, off the coasts of Mexico, Belize, Guatemala and Honduras. It is the largest barrier reef in the Western Hemisphere.
According to the InterAmerican Development Bank the ecosystem provides annual environmental services worth $183m in fisheries, $3.9bn in tourism, and $438m in coastal protections. Protecting the reef can boost the economic and climate resilience of the surrounding countries.
The project uses a model designed by WTW that captures the relationship between the levels of hurricane intensity and reef damage at each site. The cover uses fast-paying parametric insurance to fund and prompt community-led reef restoration of the critically endangered 1,000km reef system.
WTW said the programme was successful in its first year, and as such it has since been expanded to cover additional critical coral reef sites in the southern part of the MAR, including the Bay Islands in Honduras.
AXA Climate and Munich Re were selected due to their commitment to protect nature, their expertise in parametric insurance solutions involving public and private stakeholders, WTW said.
They were also chosen because of their competitive pricing, which will deliver the greatest value for MAR Fund and the climate-vulnerable coastal communities it serves, WTW added.
August Pröbstl, global head of Munich Re’s division for non-traditional risk transfer, said, “The protection of marine resources is explicit subject to the 14th Sustainable Development Goal. Munich Re’s ambition is to show how insurance can contribute to these goals, while driving innovation and enabling sustainable business development. The MAR Insurance Programme is an important milestone and we are proud to contribute to this pioneering solution for the protection of coral reefs.”
Antoine Denoix, CEO of AXA Climate, added, “The development of this innovative impact insurance product is the perfect example of a successful co-ordinated international effort to preserve the oceans’ most important habitats. That is the blue economy we need, the economy of developing possibilities capable of enhancing coastal resilience and integrating local communities.”
Parametric insurance can be an incredibly valuable tool for protecting against extreme weather events. Parametric InsurTech Skyline Partners recently partnered with Howden and global reinsurer Munich Re to develop a parametric insurance solution designed to protect farmers in Jamaica from extreme weather events.
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