Willis Towers Watson launches insurance coverage program for coral reef


The Mesoamerican Barrier Reef System is classified as critically endangered by the Red List of Ecosystems of the International Union for Conservation of Nature. The reef system is home to 65 species of coral and more than 500 species of fish, as well as many other protected species. Coastal wetlands, mangrove forests and seagrass meadows also protect against storms and coastal erosion.

Thanks to the effects of climate change and other stressors, the risk of a hurricane, which leads to irreversible coral destruction and mortality, has increased.

“Early action to clean up the reef and jump-start regeneration and recovery is critical to reducing the overall impact of lost ecosystem services – both socially and economically,” said WTW. “However, restoring natural ecosystems after extreme events is often not a priority, as resources are mainly concentrated on gray infrastructure and land.”

The new project is co-financed and implemented by WTW and the Mesoamerican Reef Fund, the regional financing system for large-scale maintenance, preservation and restoration of the reef system. MAR Fund will be the policyholder for the program.

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“In 2018, we launched the Global Ecosystem Resilience Facility at the World Ocean Summit in Cancun,” said John Haley, CEO of Willis Towers Watson. “We are excited to be back in Central America, working with the MAR Fund, and being supported by the InsuResilience Solutions Fund to build resilience in the Mesoamerican Reef and its communities.

“Marine ecosystems may be ‘free’ public goods, but their active conservation is essential to maintaining their health and value. This program helps us learn how insurance can provide a unique common governance framework to manage reefs and other valuable natural ecosystems. “

“This collaboration is a great opportunity for the MAR region,” said María José González, executive director of the MAR fund. “We see the insurance model as a risk management tool that provides immediate funds for reef restoration, thereby helping to strengthen coastal resilience and restore MAR and the environmental services it provides. MAR Fund is the policyholder and manages the payouts. We will work closely with national governments and other partners and stakeholders to build the necessary capacity for emergency response and preparedness. “

The InsuResilience Solutions Fund (ISF) has signed the funding agreement for the program.

“This partnership bundles the expertise of local partners and the insurance sector and ensures that products are developed according to the needs of the vulnerable population,” said Annette Detken, Director of the ISF. “Our grant will co-fund the development and implementation of this innovative insurance product that protects coastal ecosystems that provide much-needed services to local communities. We believe this insurance solution could serve as a model for other countries looking to protect important natural resources such as coral reefs. “

Payouts under the program are triggered by the intensity of a hurricane converted into an estimate of the extent of damage to the reef. A group policy covers the pilot reef locations with a tailored payout structure that reflects the cost of responding at each location to different levels of damage.

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