Re/insurance broker Willis Tower Watson has partnered with the Mesoamerican Reef Fund on the development and implementation of insurance solutions aimed at protecting and restoring the 1,000km reef system along the Caribbean coast post-hurricane.
The parametric insurance covers hurricane risk to the critically endangered Mesoamerican Reef (MAR) and the communities dependent on it.
It has been reported that pilot coverage for key reef sites in Mexico, Belize, Guatemala, and Honduras will enhance the climate resilience of almost 2 million beneficiaries.
The project is being co-funded and implemented by Willis Towers Watson and the Mesoamerican Reef Fund (MAR Fund), the regional financing mechanism for large-scale maintenance, conservation, and restoration of the reef system. MAR Fund will be the policyholder of the insurance programme.
“In 2018, we launched the Global Ecosystem Resilience Facility at the World Ocean Summit in Cancun. We are delighted to be back in central America, partnering with the MAR Fund and supported by the InsuResilience Solutions Fund, to build resilience of the Mesoamerican reef and its communities,” said John Haley, Chief Executive Officer of WTW.
“Marine ecosystems may be ‘free’ public goods, but their active maintenance is essential in sustaining their health and value. This programme helps us learn how insurance can provide a unique shared governance framework to manage reefs and other vulnerable natural ecosystems.”
María José González, executive director of MAR Fund added, “This collaboration is a great opportunity for the MAR region.
“We see the insurance model as a risk management tool that will provide immediate funds for reef restoration, thereby contributing to strengthening coastal resilience, and to the recovery of the MAR and the environmental services it provides. MAR Fund will be the policyholder and will manage the pay-outs.”
The InsuResilience Solutions Fund (ISF), managed by Frankfurt School of Finance and Management and funded by KfW Development Bank, has signed the grant funding agreement for the insurance programme.
“This partnership combines the expertise of local partners and the insurance sector, ensuring that products are developed according to the needs of the vulnerable population,” commented Annette Detken, director of the ISF.
“Our grant will co-fund the development and implementation of this innovative insurance product insuring coastal ecosystems that provide much needed services for local communities. We believe this insurance solution could serve as a model for other countries seeking to protect important natural assets, like coral reefs.”
“We are grateful to the ISF for supporting the design of the MAR Insurance Programme, and most importantly, funding its implementation,” said Simon Young, a senior director in the Climate and Resilience Hub at Willis Towers Watson.
“Tangible examples like this demonstrate the possibilities for innovative financing to support practical action to build the resilience of crucial ecosystems and the communities, livelihoods, and biodiversity they support, and to unlock large-scale investments in natural assets which are critical to address loss of biodiversity and increasing impacts of climate change.”