Designing a new type of insurance to protect the coral reefs, economies and the planet
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Investing in nature can be one of the most effective adaptation measures in the fight against climate change. Carbon capture is so critical for the next 20 years and some natural assets, such as coral reefs, can be five to ten times more effective at this than man-made solutions.
One such sustainability project we've been helping to drive forward is an underwriting nature initiative. Swiss Re teamed up with The Nature Conservancy and regional governments in Mexico to help protect the Mesoamerican coral reef off the coast of Mexico's Yucatan Peninsula. Research had shown that there was a connection between a healthy coral reef and the region's ability to sustain itself economically. In other words, if the reef were to die as a result of pollution and storm damage, it would no longer be able to prevent beach erosion, which, in turn, would threaten the region's key source of income, tourism. We devised an insurance solution that would ensure rapid disbursement of funds to enable trained community members to deal with reef damage following a severe storm. It was the world's first ever nature-based solution to protect Mexico's coral reef.
Veronica Scotti, Chairman of Global Partnerships at Swiss Re said: "By combining private capital with public resources in a trust to fund premiums, we can help governments in vulnerable regions plan ahead more consciously to protect important natural assets, crucial to both the planet and the economy, like the coral reefs. In helping to speed up the recovery after a natural disaster, this type of innovative insurance will also help reduce the hit to the local and national economies overall. What we see is a new type of parametric insurance product that offers rapid disbursement of capital, which can be adopted for broader application in the market. We believe this could become a very effective tool to help countries protect their oceans better and achieve climate resilience faster."