Insuring nature to reduce risks

The report highlights the issues and the opportunities for risk transfer solutions for protecting coral reefs and improving their resilience. The findings will help policymakers and practitioners grasp how insurance and alternative risk transfer mechanisms can create a potential stream of financial resources for coral reef restoration. The paper argues the merit of restoring reef ecosystems as a way of supporting risk reduction. It also examines insurance’s contribution to reef resilience and the need for continued risk awareness and education.

Risk transfer for natural capital can happen either through insurance to repair the reef and compensate the beneficiaries after any damage, or through investing in the effective management of reefs to reduce the frequency, severity, or impact of the hazards. The latter is more cost-effective but often is more challenging to implement. Insurance is effective for local authorities when facing hazards of high severity and low frequency, like destructive storms.