Mesoamerican Reef Fund (MAR Fund), InsuResilience Solutions Fund and WTW (NASDAQ: WTW) today announced the appointment of Munich Re in addition to AXA Climate as the insurance capacity providers that will support the MAR Insurance Programme, a central pillar of MAR Fund’s Reef Rescue Initiative.
Using an innovative model designed by WTW that captures the relationship between the levels of hurricane intensity and reef damage at each site, the programme uses fast-paying parametric hurricane insurance to fund prompt, community-led reef restoration of the critically endangered 1,000km reef system.
Success during its first year has also led to the programme being significantly expanded to cover additional critical coral reef sites in the southern part of the MAR, including the Bay Islands in Honduras. This means the size of the reef area now insured is equivalent to 73,570 football pitches. When launched in 2021, the programme initially targeted four sites with protected status – Banco Chinchorro, Arrecifes de Xcalak, Hol Chan and Turneffe Atoll.
Following a competitive placement process by WTW’s parametric design and broking specialists within its Climate and Resilience Hub and Alternative Risk Transfer team, AXA Climate and Munich Re were selected because of their commitment to protect nature, their expertise in parametric insurance solutions involving public and private stakeholders, and their competitive pricing delivering greatest value for MAR Fund and the climate-vulnerable coastal communities it serves.
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, said: “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.”
A vitally important ecosystem stretching along the coasts of Mexico, Belize, Guatemala and Honduras, the MAR is the largest reef system in the Americas and estimated by the InterAmerican Development Bank1 to provide annual environmental services worth US$183 million in fisheries, US$3.9 billion in tourism, and up to US$438 million in coastal protection.
A key objective of the initiative is to significantly enhance the economic and climate resilience of almost 2 million people who could eventually see their exposure to ocean risk reduced by the scheme – through increased coastal protection, recovery of environmental services provided by reefs and livelihood opportunities.
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The programme is a vital step forwards in developing comprehensive risk management strategies for the entire Mesoamerican Reef,”Rowan Douglas | Head of the Climate and Resilience Hub at WTW
Rowan Douglas, Head of the Climate and Resilience Hub at WTW, said: “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.”
The MAR Programme, co-funded and implemented by WTW and the MAR Fund, is the first multinational collaboration to design and implement parametric insurance covering hurricane risk to the Mesoamerican Reef. The development of this innovative programme has been made possible with financing from the InsuResilience Solutions Fund, building on the early support of Global Affairs Canada through the Ocean Risk and Resilience Action Alliance.
Source: Willis Towers Watson
