WTW, in partnership with The Nature Conservancy (TNC), has announced the acquisition of a new coral reef insurance policy in Hawaii.
This new policy, which builds upon the inaugural US coral reef insurance initiative launched in 2022, extends coverage across the main Hawaiian Islands and enhances potential payouts following qualifying storm events.
The updated insurance scheme encompasses an additional 314,976 square miles, aiming to include a broader range of storm events. It features a maximum annual payout of $2 million, with up to $1 million available per storm.
The policy’s minimum payout has increased to $200,000, aimed at facilitating substantial post-storm recovery efforts. Activation of the policy occurs when tropical storm winds reach or exceed 50 knots within the designated coverage area.
TNC, with assistance from WTW, formulated the new policy through a selection process that attracted seven competitive bids from insurers, including a company from the Munich Re Group.
The increased number of bids this year, WTW noted, indicates growing interest in nature-based solutions among insurers, reflecting a broader trend toward utilizing parametric insurance for disaster risk management of natural assets.
Simon Young, senior director in WTW’s disaster risk finance and parametric team, highlighted the significance of parametric insurance in providing immediate funding for restoration activities post-storm.
“Increasing recognition of this value by conservation organizations, government bodies and other stakeholders on the demand side and by insurers on the supply side is mainstreaming parametric protections, driving accessibility and sustainability,” Young said.
Hawaii’s coral reefs, vital to the state’s economic and cultural fabric, serve as a critical line of defense against storms, absorbing up to 97% of wave energy. They also support the local economy by providing flood protection valued at over $836 million and generating more than $1.2 billion annually from reef-related tourism.
What are your thoughts on this story? Please feel free to share your comments below.
