WTW, a leading global advisory, broking, and solutions company, has introduced a groundbreaking parametric insurance policy aimed at protecting the coral reef system of the South Pacific Ocean’s Lau Group of islands.
The new insurance policy is designed to address the growing threats facing the coral reefs in the Lau islands, located in the South Pacific.
These pristine islands are particularly vulnerable to climate change-induced phenomena such as sea level rise, ocean warming, acidification, and tropical cyclones.
The degradation of coral reefs not only poses ecological risks but also endangers the livelihoods of the Indigenous people of Lau, who rely on the reef ecosystem for sustenance and income.
Recognising the lack of adequate climate risk protection in the region, especially for natural assets like coral reefs, WTW collaborated with Fiji’s Vatuvara Foundation (VVF) and BHP to develop a bespoke insurance solution tailored to the specific needs of the Lau islands.
This innovative programme, supported by BHP’s social investment funds, provides timely financial assistance to mitigate the impact of cyclones and support community-led efforts for reef recovery.
The parametric insurance policy operates on a trigger-based mechanism, enabling rapid access to funds following destructive cyclone events.
This allows for swift identification of reef damage and facilitates immediate assistance in reef recovery efforts. The programme also extends support to local communities in the form of food and water security initiatives, alleviating post-disaster concerns and promoting long-term resilience.
The initial coverage will encompass Vatuvara Island, Yacata, and Kaibu, with the potential for expansion to other sites within the Lau Seascape in the future.
Sarah Conway, Director and Ecosystem Resilience Lead, WTW, said, “We are grateful to BHP for supporting the design and implementation of the first coral reef insurance programme in Fiji. 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.”
Katy Miller, Director, Vatuvara Foundation, said, “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.”
Ashley Preston, Head of Climate Resilience, BHP, said, “BHP is funding an innovative parametric insurance product, which aims to support the conservation of coral reefs and surrounding local communities in Fiji’s northern Lau Group, and build the knowledge base for how similar financial products could be used to improve climate resilience. 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.”
PCRIC CEO, Aholotu Palu, 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; 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.”
Keep up with all the latest FinTech news here
Copyright © 2024 InsurTech Analyst
