WTW, along with the Mesoamerican Reef Fund (MAR Fund) and the InsuResilience Solutions Fund has appointed Munich Re and 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 a model designed by WTW that captures the relationship between the levels of hurricane intensity and reef damage at each site, the programme uses parametric hurricane insurance to fund prompt, community-led reef restoration of the critically endangered 1,000km reef system.
Following a placement process by WTW’s parametric design and broking specialists within its climate and resilience hub and alternative risk transfer team, the firm said 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.
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.”
According to WTW, the program has been significantly expanded at this renewal 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.
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 $183m in fisheries, $3.9bn in tourism, and up to $438m in coastal protection.
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.”