Insuring Coral Reefs
In a landmark move, Indonesia has become a pioneer in protecting coral reefs using insurance. In November 2024, Indonesia’s Ministry of Marine Affairs and Fisheries issued a regulation establishing the Marine Biodiversity Trust Fund, or “Blue Window,” to help fund sustainable marine programs. This initiative, supported by the UNDP and Swiss Re, aims to create parametric insurance solutions for coral reef protection and restoration, starting with the Gili Islands.
Why coral reefs matter
Coral reefs are vital to the health of marine ecosystems and the global economy. Indonesia is home to 72% of the world’s coral species, with reefs contributing over $3 billion annually to its economy through tourism, fisheries, and agriculture. Beyond economic value, reefs act as natural barriers against coastal flooding and erosion, protecting over 600 million people worldwide.
Yet, reefs face grave threats from climate change, pollution, and overfishing. Studies suggest up to 90% of reefs could be lost by 2050 if urgent action is not taken.
Insurance for coral reefs
The Gili Matra Islands project introduces parametric coral reef insurance, which provides swift payouts based on predefined disaster triggers like storms or wave damage, enabling immediate post-disaster repair and restoration. This fast-tracks reef recovery and supports the livelihoods of local communities dependent on the reef.
Swiss Re leads the technical design, while the Indonesian Environmental Fund Management Agency (BPDLH) manages the fund. Local stakeholders’ inputs are considered to ensure community needs are reflected in the insurance model.
How does the insurance model work?
The insurance model combines government funding with third-party contributions from marine resource users. The monies from insurance claims are directed toward restoration activities such as:
- Debris removal
- Reattaching broken coral
- Monitoring reef health
Additionally, the fund covers smaller, frequent damages through alternative risk transfer tools and maintains a capital buffer for uninsured events.
Around the world
This isn’t the first time nature has been insured. In Hawaii, The Nature Conservancy created the U.S.A.’s first coral reef insurance policy in 2022. It was renewed in 2025 with Munich Re, expanding its coverage to eight islands and offering up to $2 million in payouts per year.
A similar policy in Mexico paid out $850,000 in 2020 following Hurricane Delta, allowing rapid reef restoration.
These examples show that insurance can provide critical funding for ecosystem recovery and to build climate resilience.
Can India protect Its own coral reefs?
India is home to major coral reef zones across:
- Lakshadweep Islands
- Andaman & Nicobar Islands
- Gulf of Mannar (Tamil Nadu)
- Gulf of Kachchh (Gujarat)
- Malvan (Maharashtra)
These reefs support local fisheries, tourism, and coastal resilience, yet are under increasing stress from climate change, overfishing, and tourism-related degradation.
Considering India’s vulnerability to cyclones and rising sea levels, coral reef insurance can play a transformative role in safeguarding:
- Livelihoods of coastal communities
- Biodiversity of India’s marine ecosystems
- Infrastructure along fragile coasts
India should explore public-private partnerships involving insurance companies to design parametric insurance models and disaster reef recovery funds.
To make this possible, India needs:
- Legislation for nature-based insurance
- Risk modelling frameworks for local ecosystems
- Partnerships with reinsurers and conservation bodies
- Public-private investment mechanisms
Insurance for environmental protection
The Indonesian model is a blueprint for using insurance as a tool for environmental protection. As the climate crisis worsens, the ability to finance swift recovery of natural infrastructure will define the resilience of our future, and perhaps even our very survival.
insurancepe believes that by turning conservation into a risk-sharing opportunity, we can protect irreplaceable ecosystems and the communities that depend on them.
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