Willis, a WTW business, and the Caribbean Biodiversity Fund (CBF) have launched a first-of-its-kind parametric insurance programme to protect Caribbean coral reefs.
Liberty Mutual will provide capacity, with InsuResilience Solutions Fund (ISF) providing technical assistance and co-finance support.
Coral reefs are among the most ecologically and economically significant ecosystems in the Caribbean; however, they face accelerating threats, including increasingly damaging hurricanes.
To combat this, Willis’ Alternative Risk Transfer Solutions team, in collaboration with the CBF, has designed a pilot parametric policy, which is in place for the 2026–2027 Atlantic hurricane season. It covers 1,800km² of coral reefs stretching along the coasts of the Dominican Republic, Jamaica, St. Lucia, and St. Vincent and the Grenadines.
The parametric policy introduces a “Dynamic Cat-in-Circle” structure, designed to significantly reduce the “near miss” risk associated with traditional Cat-in-Circle policies.
In a traditional structure, a fixed area is defined around an insured location, with payouts triggered if the hurricane eye enters that fixed area. A “near miss” occurs when a storm narrowly misses the defined area, resulting in no payout despite causing significant impacts.
Alternatively, the “Dynamic Cat-in-Circle” solution adjusts the insured area based on the hurricane’s size, using the radius of maximum winds (the distance from the eye to peak winds). This creates a dynamic, storm-specific insured area. As a result, if the insured location is hit by the hurricane’s strongest winds, a payout will be made. Additional concentric circles with lower payouts further align cover with a hurricane’s wind footprint.
Kaniescka Yogeswaran, Manager, Alternative Risk Transfer Solutions, Willis, said, “Helping to design the first ‘Dynamic Cat-in-Circle’ parametric policy for coral reefs in the Caribbean has been a rewarding challenge. With climate change-related natural hazards increasing in scale and frequency, this type of ground-breaking solution enables the rapid deployment of resources to help repair critical ecosystems and restore services following a major event like a hurricane.”
Karen McDonald Gayle, CEO of the Caribbean Biodiversity Fund, added, “The Caribbean Biodiversity Fund is thrilled to pilot this world-first coral reef insurance policy. In the Caribbean, 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.”
As payouts are triggered by independently verifiable hurricane parameters, funds can be disbursed quickly within the window for effective reef response.
Willis noted that swift clean-up, coral stabilisation and restoration following a damaging event have been shown to improve coral survival and recovery, supporting overall reef health.
The pilot aims to demonstrate that parametric insurance can be effectively applied to support reef conservation in the Caribbean island context.
The pilot currently provides a policy limit of $1 million across the four participating countries, which remains modest relative to the scale of hurricane risk facing Caribbean reefs. Premiums for this financial protection are being co-funded by ISF, with a longer-term premium financing strategy to be developed during the project.
Ultimately, the programme’s goal is to establish a validated, scalable and sustainable financing model to close the funding gap after hurricane damage to Caribbean reefs, protecting the coastal communities, fisheries and tourism economies that depend on them across the region.
Charlotte Belin, Senior Underwriter at Liberty Mutual, said, “Liberty is proud to provide the insurance capacity for this pioneering programme and to support a solution that recognises the vital role coral reefs play in the resilience of Caribbean communities and economies. We hope this pilot will demonstrate how insurers can work alongside conservation and finance partners to develop scalable protection for natural assets.”
Dr. Annette Detken, Head of InsuResilience Solutions Fund (ISF), added, “Healthy coral reefs are essential for protecting livelihoods, supporting biodiversity and strengthening the resilience of coastal communities across the Caribbean. This partnership demonstrates how innovative risk financing can help safeguard natural capital by ensuring funding is available immediately after disasters strike. At ISF, we are proud to support solutions that strengthen resilience while protecting ecosystems that communities and local economies depend on.”
