Divers restore a reef colony in Quintana Roo, Mexico
Reef Restoration Divers restore a reef colony in Quintana Roo, Mexico © Daniela Zambrano / TNC


World’s First Coral Reef Insurance Policy Triggered by Hurricane Delta

The almost $800K payout from the policy will fund the repair of a stretch of reef and beach along the Mesoamerican Reef in Quintana Roo, Mexico

Hurricane Delta, which hit the coast of Quintana Roo, Mexico, on October 7th, officially triggered the world’s first ever coral reef insurance policy. The Nature Conservancy (TNC), working with partners, fascilitated the creation of this policy from its inception.The resulting payout of almost $800,000 will be used to offset the costs of repairing the insured reefs and beaches along the Mesoamerican Reef in the Yucatan Peninsula.

Thanks to the commitment of the Quintana Roo Government, which purchased this visionary insurance policy in 2019 and renewed it in 2020, this is the first time ever that a reef has benefited from this kind insurance payout to repair damage sustained from a hurricane.

The insurance covers an area of 160 km along the coast of Quintana Roo and was triggered by wind speeds of 100 knots during Hurricane Delta.The funds for the insurance policy came from the Coastal Zone Management Trust, which was established in 2018 by the Government of Quintana Roo with support from The Nature Conservancy and partners.

 In concert with the insurance payout, the National Commission of Natural Protected Areas (CONANP) launched an impressive post-storm response plan involving nearly 80 reef brigade members; trained volunteers from local communities and the tourism sector, who have been repairing the damage to the reef since the hurricane struck.

Reefs sustain the tourism industry of Quintana Roo by providing valuable coastal protection against storms, reducing beach erosion, producing white sand, and attracting over one million snorkelers and scuba divers a year. Extreme storms put these services at risk since reefs can lose between 15% to 55% of their coral cover after a strong hurricane. If we continue to allow reefs to degrade because of storms or other reasons, they will not be able to protect our valuable coastlines. Building an immediate post-storm response is critical to effectively deploy people and resources to repair damage.

Mark Way, Director of Global Coastal Risk and Resilience, The Nature Conservancy, said: “This is a very significant milestone in our work to explore the use of insurance as a mechanism to protect at -risk coastal ecosystems and the communities and economies that depend on nature to protect them, their property and their livelihoods. The insurance payout will fund vital reef repair activities.  This is a win for nature, a win for coastal communities and will drive further interest in conservation finance and the need to protect marine ecosystems across the globe.”

On the Sunday following the arrival of Hurricane Delta, reef brigades assessed the damage done to the reef and launched their planned rapid response. During the first 11 days post-Delta these brigades, working in the Puerto Morelos Reef National Park, stabilized 1,200 large coral colonies that had been displaced and overturned. The brigades also rescued and transplanted almost 9,000 broken coral fragments, some of which will now grow in to new coral colonies. Simultaneous efforts took place in Cancun, Nizuc and Isla Mujeres Reef National Park. The brigades were formed with the support of TNC and the CRIAP-INAPESCA, a fisheries research center in Mexico.

Fernando Secaira, Climate Risk and Resilience Lead, Mexico and Northern Central America, The Nature Conservancy, said: “Coral reefs are part of coastal communities’ first-line of defense against hurricanes and tropical storms. This innovative approach to protecting reefs paid off. Insurance plus government commitments paired with on-the-ground rapid response create the perfect formula to quickly repair critical coral reefs. It’s a win-win and we look forwad to identifying other parts of the world where this approach could work.”

We need to protect natural systems so that they remain healthy and increase efforts to restore those that we have lost, and insurance could help in both cases. It can provide funding for those ecosystems damaged by catastrophic events, and potentially make governments and coastal property owners investing in coastal protection projects more comfortable to use natural systems in the future as their investments could be insured agaist loss.

TNC and partners are now working in other locations around the world to take the model developed in Mexico to scale. On December 3, 2020, TNC released a report assessing the feasibility of developing parametric insurance for coral reefs in Florida and Hawai‘i. The report finds that coral reefs in Hawaii and Florida could be insured against damage from hurricanes but potentially also, in the case of Hawaii, against marine heatwaves, (bleaching) and sedimentation from stormwater runoff.

In many places, this post-storm response capacity will be replicated including organizing and training reef brigades and designing financial mechanisms and reef insurance products. 

The Nature Conservancy is a global conservation organization dedicated to conserving the lands and waters on which all life depends. Guided by science, we create innovative, on-the-ground solutions to our world’s toughest challenges so that nature and people can thrive together. We are tackling climate change, conserving lands, waters and oceans at an unprecedented scale, providing food and water sustainably and helping make cities more sustainable. Working in 76 countries and territories—37 by direct conservation impact and 39 through partners—we use a collaborative approach that engages local communities, governments, the private sector, and other partners. To learn more, visit www.nature.org or follow @nature_press on Twitter.