Broking group WTW, working with the Mesoamerican Reef Fund and InsuResilience Solutions Fund, has announced a renewal and expansion of the innovative parametric hurricane insurance program to protect the coral reef, while adding additional capacity from reinsurance firm Munich Re.
The project to develop an innovative parametric insurance program to protect the Mesoamerican Reef system and the communities that rely on it against impacts from hurricanes was launched in 2021.
WTW designed and structured the parametric insurance program, with support from the Fund’s, while the sole insurance carrier sitting behind the parametric reef insurance policy at launch was AXA Climate, the parametric and climate risk transfer focused unit of global insurance and reinsurance carrier AXA Group.
WTW said this morning that it has now expanded the area of the Mesoamerican reef that is covered by the parametric insurance arrangement.
The program has been significantly expanded to cover additional coral reef sites in the southern part of the MAR, including the Bay Islands in Honduras, taking the size of the reef area now insured to around 73,570 football pitches.
WTW’s parametric design and broking specialists within its Climate and Resilience Hub and Alternative Risk Transfer team ran a competitive placement process and as a result AXA Climate and Munich Re have been selected as capacity providers for the expanded program.
This is because of their commitment to protect nature, their expertise in parametric insurance solutions involving public and private stakeholders, and their competitive pricing, WTW explained.
August Pröbstl, global head of Munich Re’s non-traditional risk transfer division, commented “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.”
Rowan Douglas, Head of the Climate and Resilience Hub at WTW, further explained, “The programme is a vital step forwards in developing comprehensive risk management strategies for the entire MAR, as well as other reefs around the globe – and truly showcases the potential for financial innovation to build resilience in coastal communities adapting to climate change.”
María José González, executive director of MAR Fund said, “The insurance is an important risk management instrument that will provide immediate funds to repair hurricane damages to the reef, therefore contributing to their survival, recovery, and long-term provision of their environmental services. MAR Fund and its partner, WTW, in collaboration with the authorities of the MAR, continue implementing the insurance programme, providing proof to more stakeholders that recognising the value of nature, and financing emergency response for reef restoration, cannot be overlooked.”