The MAR Insurance Programme, a central pillar of MAR Fund’s Reef Rescue Initiative, is a regional financial mechanism that uses parametric insurance to rapidly deploy funds for community-led response activities which repair reef damage following destructive hurricane impacts. These response activities boost reef recovery and enhance the conservation of endangered coral reef ecosystems along the 1,000km Mesoamerican reef spanning Mexico, Belize, Guatemala and Honduras. Home to 65 species of coral and more than 500 species of fish, over 2 million people depend on the reef ecosystem for their livelihoods, nutrition, and coastal protection.
In 2021, after designing an innovative model to capture the relationship between the levels of hurricane intensity and reef damage at each site, and with premium funded by ISF, WTW 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, 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.”
The programme demonstrated its value when a category 1 hurricane hit the Turneffe Atoll Marine Reserve in Belize in November 2022. Calculations completed by WTW as the Calculation Agent confirmed that the wind intensity reached 70 knots, triggering a US$175,000 pay-out, which MAR Fund received in full within just 2 weeks of the event. Within 48 hours of receiving the pay-out, MAR Fund transferred the funds out to the brigades, coordinated by Turneffe Atoll Sustainability Association (TASA). Within 15 days of the event, the first brigade members entered the water. Brigade members were deployed to two Turneffe Atoll sites to rapidly assess damage to the reef and subsequently carry out the first phases of response activities, stabilising and repositioning almost 200 fragments of staghorn and elkhorn coral as well as boulder and soft corals.
Dr Annette Detken, 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.”
Now entering its third year, and with premium support from ISF and UNDP (through the AF-EU-UNDP Innovation Small Grant Aggregator Platform (ISGAP), the programme is scaling up to cover two more sites in Honduras and two more sites in Belize (in partnership with the Wildlife Conservation Society (WCS)), expanding the portfolio to 11 reef sites across the MAR region. WTW’s Alternative Risk Transfer team placed the product competitively in markets and AXA Climate was selected.
Antoine Denoix, CEO of AXA Climate, said: “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.”
With each year, WTW captures lessons learnt with partners to continuously improve the programme. For example, following the pay-out experience from Hurricane Lisa, WTW worked with MAR Fund to further refine the parametric structure so that pay-outs are informed by response capacity, rather than ideal response for reef damage. This adjustment optimises the product’s pay-out structure and considers the level of local capacity to reasonably implement reef response activities given their number of trained brigade members, ensuring efficient use of premium.
The ultimate aim of this programme is to significantly enhance the economic and climate resilience of the more than 2 million people who depend on the reef for coastal protection and livelihood opportunities. This award-winning programme proves the reliability, timeliness and effectiveness of parametric insurance for ecosystem resilience, and plans are well underway to build a sustainable source of premium financing and an expanded response capacity in the coming years, as well as to further expand the geographical coverage of the programme.
Simon Young, Co-lead of the Disaster Risk Finance and Parametrics team in the Climate and Resilience Hub at WTW, said: “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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