Mexico gets parametric insurance for coral reef
The Nature Conservancy and the state government of Quintana Roo in Mexico have created a “Coastal Zone Management Trust” which will finance the first-ever parametric insurance policy covering a coral reef and the beach sand against the impact of hurricanes.
The new product which was announced at the 2018 World Ocean Summit in Mexico will help the conservation and swift restoration of the reef, if damaged by a major hurricane. In addition, it will support the economic resilience of the region and offer an opportunity to create a scalable new market for the insurance industry itself, according to Swiss Re, which supported the design of the product.
Funds for the trust and subsequent insurance premium will be collected as a portion of the tourism taxes and other government sources. The trust will provide a suite of benefits that will also strengthen the economic resilience of the region, encourage permanent conservation and restoration of the reef and create a scalable new market for the insurance industry.
The Mesoamerican Reef is the longest barrier reef in the Western Hemisphere. It is home to some of the world’s most important and unique coral reefs, mangrove forests, fish species, and marine mammals. The reef protects the most important tourism hub in Mexico, the Riviera Maya, which receives more than 10 million tourists per year and generates $10 billion annually.
A healthy coral reef can reduce 26 percent of economic losses caused by hurricanes and storms. However, data show that since 1980, 80 percent of live coral cover in the Mexican Caribbean has been lost or degraded due to disease, bleaching events, diminishing herbivores, and algae overgrowth.
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