World-First Parametric Insurance Protection For Endangered South Pacific Coral Reef System Launched

WTW, (Formerly Willis Towers Watson), announced the placement of a new parametric insurance policy that will help protect the coral reef system of the South Pacific Ocean’s volcano-formed Lau Group of islands, one of the Earth’s most vulnerable and isolated places.

The Lau islands, located on the eastern side of the Fiji archipelago, comprise sixty islands and islets over 114,000km2 of ocean. Sea level rise, ocean warming, acidification and the increasing frequency of tropical cyclones threaten coral reefs and the livelihoods of the Indigenous people of Lau that depend on the reef ecosystem as a source of food and income.

There is currently little in the way of climate risk protection available in the region beyond insurance policies covering fixed assets such as property. These only pay out after physical damage, and after a lengthy loss-adjustment process. Even then, very few households carry such coverage.

Supported by BHP through social investment funds, WTW liaised closely with Fiji’s Vatuvara Foundation (VVF), the policyholder of the insurance programme, to create a fit-for-purpose insurance product tailored for a sub-set of the Lau islands.

This programme will allow payouts to be deployed at the most critical time to help them withstand the adverse impacts of cyclones and effectively manage natural resources to ensure the resilience of the ecosystems themselves.

Working with WTW and local correspondent broker Insurance Holdings (Pacific) Pte Ltd., Vatuvara Foundation chose the development insurer Pacific Catastrophe Risk Insurance Company (PCRIC) to provide the policy after a competitive placement process.

In addition to enabling VVF-led rapid reef response activities such as reattaching broken corals and debris clean-up, the insurance payouts will provide community assistance activities that will alleviate food and water security concerns caused by storm damage.

These activities will help prevent the overharvesting and further degradation of Lau’s coral reef system during a community’s recovery from a cyclone and enhance both community and reef resilience.

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.”

Initial coverage will include Vatuvara Island, which is a protected natural reserve; Yacata, where the local community resides; and Kaibu, the Vatuvara Private Islands Resort. Further sites in the Lau Seascape may be added in future years.