Munich Re joins AXA on WTW’s coral reef insurance programme

Munich Re has joined  AXA Climate in underwriting the Mesoamerican Reef Fund (MAR Fund) insurance programme that is designed by global broker  WTW (Willis Towers Watson) to provide cover for endangered coral reef against extreme weather events.

Munich Re and  AXA Climate were picked following a “competitive placement process” by  WTW’s parametric design and broking specialists within its Climate and Resilience Hub and Alternative Risk Transfer team.

The two companies will serve as the insurance capacity providers to support the MAR Insurance Programme that uses parametric hurricane insurance to fund prompt, community-led reef restoration of the critically endangered 1,000km reef system.

Launched in 2021, the programme initially targeted four sites with protected status - Banco Chinchorro, Arrecifes de Xcalak, Hol Chan and Turneffe Atoll. It has since been expanded to cover additional critical coral reef sites in the southern part of the MAR, including the Bay Islands in Honduras.

WTW said a key objective of the initiative is to significantly enhance the economic and climate resilience of almost two million people who could eventually see their exposure to ocean risk reduced by the scheme – through increased coastal protection, recovery of environmental services provided by reefs and livelihood opportunities.

The MAR Programme, co-funded and implemented by  WTW and the MAR Fund, is said to be the first multinational collaboration to design and implement parametric insurance covering hurricane risk to the Mesoamerican Reef.

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.”

Antoine Denoix, CEO of  AXA Climate, added: “The development of this innovative impact insurance product is the perfect example of a successful co-ordinated international effort to preserve the oceans’ most important habitats. That is the blue economy we need, the economy of developing possibilities capable of enhancing coastal resilience and integrating local communities.”

Rowan Douglas (pictured), head of the Climate and Resilience Hub at  WTW, commented: “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.”

María José González, executive director of MAR Fund, said: “The insurance is an important risk management instrument that will provide immediate funds to repair hurricane damages to the reef, therefore contributing to their survival, recovery, and long-term provision of their environmental services. MAR Fund and its partner,  WTW, in collaboration with the authorities of the MAR, continue implementing the insurance programme, providing proof to more stakeholders that recognising the value of nature, and financing emergency response for reef restoration, cannot be overlooked.”

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