2022 11 21 Reefs FEATURE

First Coral Reef Insurance Policy Purchased In Hawaiʻi

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Healthy coral reefs and fish at Kaʻupulehu (photo by TNC/Bryce Groark)

(BIVN) – The “first ever coral reef insurance policy in the United States” was purchased in Hawaiʻi, covering the cost of restoring the reef in the event of a future damaging hurricane or tropical storm.

From The Nature Conservancy news release issued Monday:

Today, The Nature Conservancy (TNC) announces that it has purchased the first ever coral reef insurance policy in the United States. The policy will provide funding for rapid recovery and restoration of coral reefs across Hawai’i immediately following hurricane or tropical storm damage.

TNC and partners developed the world’s first reef insurance policy specifically around hurricane damage, a major risk for coral reefs, in Quintana Roo, Mexico, in 2019. Proceeds from that policy were used to repair damage from Hurricane Delta. Since then, the Mesoamerican Reef (MAR) Fund, in collaboration with Willis Tower Watson’s (WTW) Climate and Resilience Hub, has a parametric assurance program covering the full extent of the MAR from southern Mexico through Belize, Guatemala and Honduras.

The Belize reef insurance policy was actually triggered recently by Hurricane Lisa, which resulted in a payout and the rapid recovery of the beach and reef. TNC developed the Hawai’i policy to pilot the concept after the State Senate passed a resolution in 2021 requesting a reef insurance assessment, and following a 2020 Bank of America-backed feasibility study that found coral reefs in Hawai’i can be similarly insured. natural disasters.

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School of ‘ōpelu swimming over coral reef on Hawai’i Island’s west coast (photo by TNC/Jim Kilbride)

In collaboration with WTW, TNC selected an insurance company from Munich Re to provide this parametric cover, as Munich Re is committed to using insurance to support the preservation of crucial ecosystems and the development of green infrastructure – both essential elements in addressing the global challenge of improving climate resilience. The Hawai’i policy adds tropical storms as a covered event, in addition to hurricanes covered in the Quintana Roo and MAR Fund policies, because in Hawaii tropical storms can cause significant damage without making landfall. The Hawai’i policy is triggered at wind speeds of 50 knots (57 mph) if sufficiently close to reefs and can provide payouts up to a maximum of $2 million to enable rapid reef recovery and recovery after storm damage. The policy will be in place through the 2023 hurricane season.

“The Nature Conservancy is thrilled to launch the first coral reef insurance policy in the United States,” said Ulalia Woodside Lee, Executive Director, The Nature Conservancy, Hawai’i and Palmyra. “In Hawaii, we are rooted in the environment; the health of our coastlines and communities is directly linked to the health of the coral reefs around our islands. By investing in nature, our insurance and financing partners demonstrate its value as a critical natural, cultural and economic resource.”

“Helping design the first pre-arranged, trigger-based financing policy for coral reefs in the US has been very rewarding,” said Simon Young, Senior Director, Climate and Resilience Hub, WTW. “With climate change-related natural hazards increasing in magnitude and frequency, this type of tool can enable the rapid deployment of resources to help restore critical natural capital and restore valuable ecosystem services after a rapid event.”

Coral reefs are a vital natural asset to Hawaii’s people, culture and economy and are under increasing threats from climate change and other human impacts. Each year, reefs provide coastal flood protection to people and property, more than $831 million worth of jobs, and more than $1.2 billion to the state’s economy through reef-related tourism. Hawai’i’s prized reef fisheries generate $13.4 million annually, with $10 million of that providing food and income to local families. Yet local pressures, such as overfishing and land-based pollutants, have contributed to a 60% decline in live coral cover on some of Hawaii’s reefs in the past 40 years and declines of up to 90% in some fisheries in the past century.

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Coral reef off Puakō (photo by TNC/C Wiggins)

Tropical storms and hurricanes, which are increasing in intensity due to climate change, are a major short-term threat to coral reefs. Research shows that severe hurricanes can cause a loss of 50% or more of living coral cover, and the loss of just one meter of reef height can double the cost of damage. Healthy, intact reefs can reduce up to 97% of wave energy and are the islands’ first line of defense during storms; protecting them is essential. Reef insurance offers a tangible solution.

“Managing natural resources is an expensive endeavor, and more investment is always needed,” said Brian Nielson, Administrator, Division of Aquatic Resources (DAR), State of Hawaii Division of Land and Natural Resources. “TNC has been an excellent partner in restoring Hawaiʻi’s reefs and fisheries, and we are grateful for their leadership in securing this assurance. This is a step forward in coral reef conservation and will provide essential funding to restore reefs when they are urgently needed.”

When a hurricane or tropical storm triggers a disbursement, TNC will activate an advisory committee in collaboration with DAR and other local partners to guide the use and distribution of the funds for reef restoration and restoration. In early 2023, TNC, DAR and other partners will convene to develop a response plan to guide first responders and reef managers to quickly and effectively address the impacts of storms. The plan will reflect global recovery expertise and lessons learned from post-storm recovery on the Mesoamerican Reef.

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Hawaiian Green Sea Turtle (Honu) swimming in the shallow waters of Kahalu’u Beach (photo by TNC/Bo Pardau)

“Coral reefs are vital to our people, our culture, our lifestyle and our economy; reef insurance will help us take care of them,” says Ekolu Lindsey of Kīpuka Olowalu. “In Hawaiian culture, the coral polyp is the origin of all life. We have a kuleana (responsibility) to maintain the integrity and rejuvenation of our coral reef systems. We look forward to working with TNC and other partners to develop response plans for māla (care) of our ko’a (corals) and to ensure that reef insurance funds are used fairly.”

Next steps include co-developing a rapid response plan to repair and restore Hawaii’s coral reefs after storms and training reef responders to carry out the restoration.

The Nature Conservancy thanks the generous funders without whom this would not have been possible, including the Bank of America Charitable Foundation and Howden Group Foundation, the charitable arm of the leading international insurance group, Howden Group Holdings.

Lee concluded: “We would like to thank the Howden Group Foundation and the Bank of America Charitable Foundation for their contribution to building resilience against climate change. They made this work possible through the provision of multi-year grants to support the coral reef insurance policy.”

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