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Munich Re backed parametric insurance launched for Hawaii’s coral reefs

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The innovative parametric insurance product that provides a form of protection to fund repairs following storm damage to coral reefs has now been taken up in Hawaii, with a policy provided by global reinsurance giant Munich Re, according to arranger WTW.

coral-reef-parametric-insuranceIn partnership with The Nature Conservancy, WTW has launched the parametric coral reef insurance for the first time in the United States.

The coral reef insurance had been originally launched in Mexico and then expanded to also cover the Mesoamerican Reef system as well.

Just last week it was reported that Hurricane Lisa’s landfall in Belize on November 2nd triggered the parametric insurance product.

Now, the parametric cover looks set to be more widely adopted, as Munich Re is providing a policy for Hawaii.

The parametric tropical cyclone insurance can be triggered at windspeeds of 50 knots (57 mph), if they occur sufficiently close to reefs.

It can provide quick pay-outs of up to US $2 million to fund rapid reef repair and restoration after storm damage, and to facilitate emergency care.

Funders including the Bank of America Foundation and Howden Group Foundation are backing the launch of Hawaii’s parametric reef insurance policy, which will be in place during the 2023 hurricane season.

“The Nature Conservancy is thrilled to pilot the first coral reef insurance policy in the United States,” explained Ulalia Woodside Lee, Executive Director, The Nature Conservancy, Hawai‘i and Palmyra. “In Hawai‘i, we are rooted in the environment; the health of our coastlines and communities is directly tied to the health of the coral reefs surrounding our islands. By investing in nature, our insurance and finance partners are demonstrating its value as a critical natural, cultural and economic resource.”

“Helping to design the first pre-arranged, trigger-based insurance policy for coral reefs in the U.S. has been very exciting,” added Simon Young, Senior Director, Climate and Resilience Hub, WTW. “With climate change-related natural hazards increasing in scale and frequency, this type of ground-breaking solution can enable the rapid deployment of resources to help repair critical ecosystems and restore services following a major event like a hurricane.”

“Managing natural resources is a costly endeavour, and more investment is always needed,” Brian Nielson, Administrator, Division of Aquatic Resources (DAR), State of Hawaiʻi Division of Land and Natural Resources also said. “TNC has been an excellent partner in restoring the reefs and fisheries of Hawai’i, and we are grateful for their leadership in securing this insurance. It is a step forward in coral reef conservation and will provide vital funding to repair reefs when it is urgently needed.”

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