Coral Reef Insured: Mexico Takes Out 1 Big Insurance Policy

Aug 25, 2020 | Environment, Lifestyle, Travel

It is possible for insurance companies to help preserve ecology and the oceans of the planet? There is at least one coral reef insured so far, and it is on the eastern coastline of Mexico, on the Caribbean side of this Latin country.

“A healthy coral reef insured can reduce up to 97% of a wave’s energy before it strikes the shore, mitigating both the effects of storm surge and daily coastline erosion. But unhealthy reefs are themselves vulnerable to severe storm damage, which diminishes their ability to protect coastlines. They need human help to recover after a storm.

Debris deposited on the reef—like that dragged from the beach with the receding tides—needs to be removed promptly to prevent further damage, and broken or uprooted coral colonies need to be restored within a few weeks to keep them from dying.” Copy excerpted from HuffPost “Mexico Is Saving Its Coral Reef From Hurricanes With A One-Of-A-Kind Plan,” by Alexandra Kirkman.

The World Economic Forum named biodiversity loss as one of the top 5 risks in the coming decade. Businesses should develop metrics to assess the value of nature, and make determination of value central to business decision-making

It is possible for insurance companies to help preserve ecology, the oceans of the planet and have coral reef insured?

Insurance provides an immediate infusion of cash in the event of a damaging storm, allowing hotel owners and local government who pay its premiums to quickly repair the reef and forestall further degradation.

First Coral Reef Insured Will Tip Preservation Effort Scale

In June 2019, a 100-mile stretch of the Mesoamerican Reef became the world’s first natural asset (coral reef insured) to be covered by an insurance policy. Mexico-based company Afirme Seguros used Swiss Re serve as the reinsurer. The country was first to do a coral reef insured.

  • The Mesoamerican Reef spans a total of nearly 700 miles, running from the northern tip of the Yucatán Peninsula through the Bay Islands of Honduras. It is the largest barrier reef system in the Western Hemisphere, and the world’s second-largest coral reef.
  • 60 types of hard coral provide habitat for more than 500 fish species and five species of marine turtles. The coral attracts one of the world’s largest congregations of whale sharks.
  • Since 1980, 80% of the living coral along Mexico’s Caribbean coast has been lost or degraded by pollution, disease, overfishing and storms.
  • The ecosystem and economy of Quintana Roo, Mexico’s number-one tourism destination, are affected.

Swiss Re is considering protecting other reefs in Asia, Oceania and the Dominican Republic (some efforts are in collaboration with The Nature Conservancy). The insurance firm is also examining mangrove forest protection policies in Mexico, Brazil, China and Southeast Asia, where in the past 50 years, 50% of growing regions have been lost due to deforestation.

In 2005, Mexico’s Caribbean coast was struck by two hurricanes which caused US$8 billion in damages. It closed hotels and other businesses in Cancún long enough to cause economic impact.

Where is the Mesoamerican Reef

From WWF: The Mesoamerican Reef region lies within the Caribbean Sea and touches the coasts of Mexico, Belize, Guatemala and Honduras. It contains the largest barrier reef in the Western Hemisphere, stretching nearly 700 miles from the northern tip of the Yucatan Peninsula down through the Honduran Bay Islands. Dazzling arrays of different types of coral form this underwater wilderness, and provide homes and food to hundreds of fish species, marine turtles, and sharks.

Along the shores, mangroves provide habitat for fish and shorebirds as well as protect coastal areas from the damage associated with hurricanes and strong storms.