A new insurance scheme has been created to help protect the Caribbean’s second largest coral reef in the Colombian archipelago of San Andrés, Providencia and Santa Catalina.

The solution is led by Axa Colpatria, Axa Climate, Fondo Acción and WTW Alternative Risk Transfer, with support from ORRAA, MAR Fund and funding from the Blue Action Fund.

The reefs in question form part of the Seaflower Biosphere Reserve, a UNESCO World Heritage site covering nearly 10% of the Caribbean Sea, and home to more than 250 fish species and 60 types of coral, making it one of the largest and most biodiverse reef systems in the Caribbean, second only to the Mesoamerican Barrier Reef.

When Hurricanes Eta and Iota struck in November 2020, over 70% of the reef was damaged, showing the urgent need for fast restoration finance.

The new parametric insurance triggers payouts automatically when thresholds, such as wind speeds, are reached, avoiding lengthy damage assessments.

"This model could...trigger an automatic payout of 80% of the insured value in a scenario similar to Hurricane Iota, with funds used directly for reef restoration," said Virgil Salmon, senior parametric underwriter at Axa Climate.

Juanita Blanco, director of Latam/CAC, Alternative Risk Transfer Solutions at WTW, added: “This solution is providing coverage for biodiversity in ways that traditional indemnity insurance simply can’t. Parametric insurance plays a key role in closing that coverage gap. We’re proud to have created and developed this programme for San Andrés, Providencia and Santa Catalina, helping to preserve the ecosystem – especially the coral reefs – that support the island’s life, tourism, and economy.”

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