CLIMATEWIRE | A niche financial tool is making it easier to repair critical ecosystems after natural disasters — and protect at-risk communities from future extreme weather.
The Nature Conservancy announced this week that it has expanded its parametric insurance policy for Hawaii’s coral reefs, guaranteeing a sizable payout if a storm of a certain caliber hits nearby. The idea is now gaining steam in other parts of the world, from Fiji to Mexico.
In Hawaii, the funds would be used to remove debris and reattach broken pieces of coral. The ultimate goal: the long-term preservation of the reefs, which not only carry immense biological, cultural and economic value — but also help protect Hawaiian communities from climate-juiced storms.
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“The value of the coral reefs to somewhere like Hawaii is absolutely huge,” said Simon Young of insurance brokerage firm WTW, which created the policy with TNC. “They basically act as a natural sea wall and greatly mitigate the impacts of waves on the coastline” while also supporting the tourism and fishing industries.
WTW and The Nature Conservancy billed the new policy as a “major upgrade” to a previous version launched in 2022, which expired in 2023. The new policy, which TNC purchased from Munich Re Group using $106,000 in donations, covers an additional 314,000 square miles and doubles the minimum payout TNC will receive if the covered area sees tropical storm winds above a certain intensity.
If a storm hits that is 50 knots or greater, for instance, TNC would receive a minimum of $200,000, which it would then distribute to partner organizations charged with repairing the damage. If Hawaii saw a much stronger storm, TNC could see a payout as high as…
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