Catastrophe risk modelling solution of the year, highly commended: WTW
WTW is highly commended in catastrophe risk modelling solution of the year for designing a parametric insurance programme for the Meso-American Reef (MAR) fund.
MAR stretches over 1,000 kilometres along the coast of Mexico, Belize, Guatemala and Honduras. The reef provides a crucial ecosystem to local communities including fisheries and protection against coastal hazards such as sea level rise, storm surges, beach erosion and wave-induced damage.
In the face of climate change, its ability to provide these services to increasingly vulnerable coastal communities are ever more important.
Securing the biodiversity, cultural and economic value of the MAR is the focus of the Reef Rescue Initiative, an initiative of the MAR fund and the Central American Commission on Environment and Development.
WTW worked with the MAR fund to implement an initial parametric insurance product in order to provide funding to repair the reef in the event of a hurricane.
The speedy pay-out that parametric insurance offers is crucial to the initiative because rapid intervention following a shock event like a hurricane can make the difference between a viable reef and one which will inevitably die.
WTW designed its programme for the MAR fund with two parametric mechanisms to provide flexibility in structuring and placement.
Adhiraj Maitra, WTW's global ICT climate lead, says the MAR fund initiative demonstrates how novel approaches to risk financing can deliver the rapid action that is so beneficial to building reef resilience in the face of the increasing impacts of climate change.
One of the InsuranceERM judges described the WTW entry "as an inspiring focus on protecting natural assets - a shining example of where insurance risk should focus skills to preserve our future".
Another judge said the WTW initiative "is a great example of how cat risk modelling can have a real-world nature-positive impact".