In February 2024, WTW announced the placement of the first parametric insurance policy to help protect the coral reef system of the South Pacific Ocean's volcano-formed Lau Group of islands in Fiji.
Rising sea levels, ocean warming, acidification and the increasing frequency of tropical cyclones threaten coral reefs and the livelihoods of this tiny community spread across sixty islands and islets in over 114,000km2 of ocean.
There had previously been little in the way of climate risk protection available in the Lau Islands beyond insurance policies covering fixed assets such as property. These only pay out after physical damage and after a lengthy loss-adjustment process. Even then, very few households carry such coverage.
WTW's pioneering insurance programme will allow payouts of up to $450,000 to be deployed at speed and at the most critical time to help the communities adapt and withstand the adverse impacts of cyclones, whilst also effectively managing natural resources to ensure the resilience of the ecosystems.
These activities will help prevent the overharvesting and further degradation of Lau's coral reef ecosystem during a community's recovery from a cyclone, and enhance both community and reef resilience.
"The most satisfying aspect of developing this product was the incredible collaboration between diverse stakeholders, from the local community and environmental organisation to the corporate partner, broker and insurers," says Sarah Conway, director and ecosystem resilience lead, WTW.
"In the future, we see this product helping users by providing timely financial support in the wake of triggering cyclone events, enabling rapid response and recovery. This will not only protect vital ecosystems, but also safeguard the communities who depend on them, fostering a more resilient and sustainable future."