WTW Announces The 3rd Renewal For MAR Insurance Programme With AXA Climate As Service Provider
With funding from the InsuResilience Solutions Fund and the United Nations Development Programme, as well as previous backing from the Ocean Risk and Resilience Action Alliance, the Mesoamerican Reef Fund and WTW have announced the appointment of AXA Climate as the insurance capacity provider that will support the MAR Insurance Programme in its third annual placement.
As the backbone of the MAR Fund’s Reef Rescue Initiative, the MAR Insurance Programme is a regional financial mechanism that utilizes parametric insurance to swiftly distribute money for community-led response activities to repair reef damage in the wake of severe hurricane impacts.
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The 1,000-kilometer-long Mesoamerican reef that stretches through Mexico, Belize, Guatemala, and Honduras is home to 65 types of coral and more than 500 species of fish, and its recovery and conservation are both under jeopardy. Response efforts like these are crucial since more than 2 million people rely on the reef ecosystem for survival.
WTW Announces 3rd Renewal For MAR Insurance Programme
In 2021, WTW after designing an innovative model the premium for which was funded by ISF, to capture the relationship between the levels of hurricane intensity and reef damage at each site, first placed the programme across four sites, two in Mexico, and two in Belize.
Following the success of its first year, the programme was renewed and expanded to three additional sites, one in Guatemala, and two in Honduras.
María José González, the Executive Director of MAR Fund said, “The MAR Insurance Programme is an innovative risk management instrument that allows the deployment of immediate funds to support the conservation of reefs through emergency response. Through this programme, MAR Fund and its partners, including the governments of the four MAR countries, contribute to the resilience and recovery of the Mesoamerican Reef.”
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The MAR Fund got the full $175,000 payout less than two weeks after a category 1 hurricane slammed the Turneffe Atoll Marine Reserve in Belize in November 2022, as calculated by WTW as the Calculation Agent.
WTW Announces 3rd Renewal For MAR Insurance Programme
Turneffe Atoll Sustainability Association, which coordinated the brigades, received their compensation from MAR Fund within 48 hours. Within two weeks of the event, the first brigade members entered the water and were deployed to two Turneffe Atoll sites to rapidly assess reef damage and enact the first phases of response activities, stabilizing and repositioning nearly 200 fragments of staghorn and elkhorn coral, as well as a boulder and soft corals, demonstrating the success of the initiative.
Dr Annette Detken, the Head of the InsuResilience Solutions Fund, said, “The MAR Insurance Programme is paving the way for nature-based solutions against climate risks. The ISF is proud to co-fund this innovative insurance programme protecting a unique natural treasure and providing livelihoods for vulnerable people in the MAR region.”
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In its third year, the campaign is expanding to cover 11 reef sites across the MAR region, including two new sites in Honduras and two more sites in Belize thanks to a partnership with the Wildlife Conservation Society. The Alternative Risk Transfer group at WTW successfully placed the product in the market, and AXA Climate was chosen as the winner.
Antoine Denoix, the CEO of AXA Climate, commented, “In the face of increasing climate-related disasters, protecting nature is a mechanism that needs to be thought over the long term. As a pioneer in impact insurance, our team has demonstrated with this third renewal the consistency of its commitment to ocean conservation. AXA Climate is very proud to remain a key partner in the MAR’s resilience and to have contributed to its regeneration after Hurricane Lisa.”
WTW Announces 3rd Renewal For MAR Insurance Programme
Every year, WTW documents the progress made in collaboration with its partners. In light of lessons learned during Hurricane Lisa’s payout, WTW and MAR Fund collaborated to fine-tune the parametric structure, ensuring that future payouts would be based on actual response capabilities rather than an idealized, hypothetical best case scenario for reef damage. With this tweak, the product’s payout structure is optimized, and the number of trained brigade members in the area is taken into account to determine the appropriate level of premium payout.
The people who live along the coast and rely on the reef for their livelihoods and safety are the intended beneficiaries of this program, which aims to greatly increase their economic and climate resilience. In the upcoming years, WTW hopes to increase the programme’s geographical reach and establish a sustainable source of premium funding and an enhanced response capacity.
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Simon Young, the Co-lead of the Disaster Risk Finance and Parametrics team in the Climate and Resilience Hub at WTW, added, “Entering the third year of this programme demonstrates how the convening powers of collaborative, trusted partnerships and pre-arranged finance can move the needle on coastal protection and ecosystem resilience.”
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