Analysis-First U.S. coral insurance marks the rise of the reef brigades

By Clare Baldwin/HONG KONG (Reuters) –

Conservation group The Nature Conservancy’s vision for the future of coral protection involves speed boats, and a global army of snorkellers and divers deployed when tropical storms and hurricanes damage reefs.

On Monday, the global ‘Reef Brigades’ plan came closer to reality when it bought an insurance policy on behalf of the state of Hawaii, the first U.S. coral insurance contract, which will provide funds for repair work, building on similar policies taken out in the Caribbean.

“To date, conservation has really relied on philanthropy and government grants,” Eric Roberts, a senior risk and resilience program manager at The Nature Conservancy (TNC), said. “By using insurance, we’re also tapping into the private sector for this work.”

Apart from being a precious nursery for fish, coral reefs that fringe developed coastlines can limit flooding by providing a barrier against ocean storm surges, meaning insurers have every interest in protecting them.

“Even with just the flood risk reduction value, usually that’s enough to make a business case to say, yes, we need to protect these reefs,” Roberts said.

The Reef Brigades recover reef fragments, store them in ocean or shore-based nurseries, and then re-attach them, using cement or epoxy, when it is safe at a cost ranging from $10,000 per hectare to $1.5 million per hectare when new corals grown in a nursery are required.

For the premium of $110,000 in Hawaii’s contract announced on Monday, that state will get up to $2 million of insurance protection for its coral reefs until the end of December 2023.

The policy covers the majority of Hawaii, from the Big Island to Kauai, and begins paying out at 50 knots of wind.

Higher wind speeds trigger higher payouts as a percentage of the value of the policy, up to its limit. The idea is that the payouts are available for restoration work within seven days of a storm. With this kind of policy – a “parametric” policy – there is no need for a damage assessment.


The idea of insuring reefs was first tested three years ago by the Mexican state of Quintana Roo.

Just offshore from some of the country’s most famous Mayan ruins, local tourism businesses and the government bought an insurance policy to cover their share of the Mesoamerican Reef.

Environmental group the MAR Fund later took out a policy on the rest of the Mesoamerican Reef, including elsewhere in Mexico, Belize, Guatemala and Honduras.

The policies paid out for one storm in Mexico in 2020 and another in Belize this November. Quintana Roo paid 6 million Mexican pesos ($307,850) to renew its policy last July.

“Yes, it can be a lot of money,” Secretary of Ecology and Environment Josefina Huguette Hernández Gómez said, but it was worth it.

“The cost is higher when you have the loss of biodiversity or corals than what you pay in insurance,” she said.

Willis Towers Watson, which worked on the MAR Fund policy and the Hawaii policy, said it is actively working on a coral reef policy for Fiji, and policies for coral reef bleaching, run-off due to excessive rainfall, and lost fishing days due to climate change-induced storms.

The need for the work to be rolled out globally is clear.

“An unprecedented coordinated global effort among public, private and philanthropic sectors will be required for reefs to survive beyond the end of this century,” a 2020 reef insurance feasibility study by The Nature Conservancy concluded.

Among the criticisms of the U.N. climate talks that concluded at the weekend in Egypt was that they did too little to link tackling biodiversity with limiting broader environmental damage.

Its breakthrough achievement was to agree on a “loss and damage” fund to help poor countries cope with climate disasters.

Patricia Espinosa, a Mexican diplomat and the former head of the United Nations Framework Convention on Climate Change said reef insurance dovetailed with the loss and damage conversations that took place at COP27 and should be explored more.

“The reality today is that the biggest part of the losses that we see as a result of these very radical and very severe climatic phenomena are not insured,” she said.

“If we don’t address the climate crisis, we will really have a total disaster that will be felt in each and every sector.”

($1 = 19.4900 Mexican pesos)

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