WTW has introduced a new parametric insurance policy aimed at safeguarding the coral reef system of the Lau Group of islands in the South Pacific Ocean.
This move is targeted at addressing the vulnerabilities faced by one of the most isolated and at-risk regions on the planet.
Situated on the eastern side of the Fiji archipelago, the Lau islands consist of 60 islands and islets spread across approximately 114,000 square kilometres of ocean. These coral reefs are under threat from various factors including sea level rise, ocean warming, acidification, and the increasing frequency of tropical cyclones. The livelihoods of the Indigenous people of Lau, who depend on the reef ecosystem for food and income, are particularly at risk.
Currently, the region lacks adequate climate risk protection beyond insurance policies covering fixed assets such as property. However, these policies typically only provide compensation after physical damage occurs and involve lengthy claims processes, resulting in low household participation.
Supported by BHP through social investment funds, WTW worked closely with Fiji's Vatuvara Foundation (VVF), the policyholder of the insurance program, to develop a tailored insurance product for a subset of the Lau islands. This initiative aims to enable timely payouts, allowing communities to withstand the adverse impacts of cyclones and effectively manage natural resources to enhance ecosystem resilience.
Sarah Conway, director and ecosystem resilience lead at WTW, expressed gratitude to BHP for its support in designing and implementing Fiji's first coral reef insurance program.
“Building on lessons learned from our involvement with similar initiatives in other countries, this programme provides an exciting opportunity to innovate beyond rapid reef response to also include community assistance, enhancing the resilience of the ecosystem and those who depend on it,” she said.
Ashley Preston, head of climate resilience at BHP, highlighted BHP's support for an innovative parametric insurance product aimed at conserving coral reefs and supporting local communities in Fiji's northern Lau Group.
“We are pleased to work with WTW and Vatuvara Foundation on this project, which supports BHP's commitments to action on climate, conservation, and empowering communities,” she said.
In collaboration with WTW and local correspondent broker Insurance Holdings (Pacific) Pte Ltd, Vatuvara Foundation selected Pacific Catastrophe Risk Insurance Company (PCRIC) to provide the policy.
In addition to facilitating rapid reef response activities led by VVF, such as coral restoration and debris cleanup, the insurance payouts will support community assistance efforts addressing food and water security concerns resulting from storm damage. These initiatives seek to prevent overharvesting and further degradation of Lau's coral reef system during the community's recovery from cyclones, thereby enhancing both community and reef resilience.
Katy Miller, director of Vatuvara Foundation, emphasised the significance of the parametric policy in providing prompt access to funds following destructive cyclone events for reef damage assessment and recovery efforts led by the local community in Northern Lau.
“We are thankful that the innovative parametric policy will allow for the prompt access to funds following a destructive cyclone event to identify reef damage and assist reef recovery with a community-led team in Northern Lau. Increased frequency and severity of extreme weather events is expected in the area, and protecting natural ecosystems in the Lau Group is crucial to build long-term community resilience to anthropogenic threats including climate change,” she said.
“PCRIC is very pleased to demonstrate its commitment to serve non-sovereign entities with innovative parametric insurance products, in line with PCRIC's mission to help the island communities of the Pacific to better prepare, structure, and manage finances to foster disaster resilience and ensure rapid access to funds,” said Aholotu Palu, CEO of PCRIC. “The work of the Vatuvara Foundation, both in reef conservation and in local community empowerment, is recognised by the government of Fiji as being in the national interest and consistent with development priorities, particularly the Blue Pacific Strategy, as well as commitments to climate change adaptation and disaster risk management.”
The initial coverage will include:
Expansion of coverage to additional sites within the Lau Seascape may be considered in the future.
In other news, WTW recently announced the appointment of two key personnel for its contingency division.
