The policy will be used to fund rapid coral reef repair and restoration following storms
Broker Willis Tower Watson (WTW) has partnered with environmental organisation The Nature Conservancy (TNC) to launch a coral reef insurance policy to cover hurricane damage in Hawai’i.
Announced today (21 November 2022), the policy will provide money for rapid coral reef repair and restoration across Hawai’i following tropical storm or hurricane damage.
Following the success of a TNC project in 2019 which implemented the world’s first coral reef insurance policy in Mexico, the environmental organisation worked with WTW’s climate and resilience hub to created the parametric insurance programme.
The new parametric policy is triggered at windspeeds of 57mph and provides pay-outs of up to $2m (£1.7m) within days of a weather event to fund emergency care and rebuilding.
Coral reefs are a vital natural asset for Hawai’i’s government and people but are under increasing threat due to climate change and human impacts, said a WTW statement.
According to TNC, the reefs around Hawai’i can mitigate up to 97% of wave energy from hitting coastal communities during storms but increasingly common hurricanes can cause the loss of 50% or more of live coral cover, damaging their ability to reduce the impact of these weather events.
The reefs provide coastal flood protection to thousands of the islands’ inhabitants and properties and are home to endangered animals such as the green sea turtle and Hawai’i’s official state fish, the Humuhumunukunukuapua’a.
Rapid deployment
Simon Young, senior director at WTW’s climate and resilience hub, said: “Helping to design the first pre-arranged, trigger-based insurance policy in the US has been very exciting.
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“With climate change 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.”
TNC’s executive director for Hawai’i and Palmyra Ulalia Woodside Lee said: “In Hawai’i. we are rooted in the environment – 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.”
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