Coast 4C
A parametric insurance model funding coral reef recovery after a hurricane
Key Details
Project Lead: Mesoamerican Reef Fund (MAR Fund)
Financial Innovation: Insurance
Supporting partners: WTW, Caribbean Biodiversity Fund, Forever Costa Rica Association, Fondo Acción, InsuResilience Solutions Fund, KfW, AFCIA–UNDP/ISGAP and AXA Climate
Financial Support: The Government of Canada and the UK’s Blue Planet Fund
Location: Belize, Guatemala, Honduras, Mexico, Costa Rica, and Colombia
Project Timeline: Completed (2020-2025)
People Supported: 48,299
Investment Leveraged: USD$371,461
Hectares Under Innovation: 184,757
Summary
When hurricanes strike, they don’t just batter coastlines, they also tear through coral reefs, some of the most valuable and vulnerable ecosystems on Earth. Quick action is essential to help reefs recover, but until recently, there was no reliable way to fund that response.
MAR Fund, WTW and partners are scaling up a successful innovative insurance solution that releases funds immediately after a storm hits. This funding helps local teams dive in – literally – with the tools, training, and support they need to restore damaged reefs and maintain the many benefits these natural assets provide.
After proving the model works in the Mesoamerican Reef region – where this insurance solution now protects eleven reef sites in four countries – the team is expanding the programme across the wider Caribbean to help more reefs, and the coastal communities that depend on them, bounce back faster after a hurricane.
Challenge
Coral reefs support nearly 200 million people and generate billions in coastal protection, tourism, and fishing. But when hurricanes hit, reefs can be severely damaged, and recovery needs to start fast.
Rapid response is essential but is rarely included in post-disaster management plans and budgets. Without dedicated funding in place, response is often delayed, putting both reefs and coastal communities at greater risk.
Solution
MAR Fund and WTW developed a bespoke parametric insurance product to quickly fund reef recovery after storms. Launched in 2021 as the MAR Insurance Programme, it now covers eleven key reef sites, ensuring rapid response to hurricane damage.
This solution protects approximately 10,000 hectares of coral, enhances the resilience of more than two million coastal people, and secures more than USD$3.3 billion in annual reef-related income in the region.
Scalability and Next Steps
MAR Fund is now working with partners to further scale parametric insurance products in the Caribbean region and support replication globally.
Further support from ORRAA has enabled MAR Fund and WTW to scale the insurance model across the greater Caribbean. The project is working with Fondo Acción to develop a hurricane reef insurance programme in San Andrés and Providencia, Colombia, part of Fondo Acción’s multi-year project to build long-term resilience of the reefs and local communities, with support from the Global Fund for Coral Reefs and Blue Action Fund.
Additional work has also been undertaken with Forever Costa Rica Association to explore the feasibility of trigger-based risk financing mechanisms to cover additional key risks to coral reefs, including marine heatwaves and rainfall-driven runoff.
“This kind of initiative with Fondo Accion…can help us a lot because we know how to act and combat the effects of climate events.” – Gilberto Myles, Coralina Environment Agency, Colombia
