Coral reef in foreground; fish visible in background
Coral Reef in Indonesia Soft Corals and "Windows", photographed underwater in West Papua Province, Indonesia. © © Jeff Yonover


Insuring Nature to Ensure a Resilient Future

The world’s first insurance policy on a coral reef is now in place in Mexico

What’s happening on a 160-kilometer stretch of coastline on Mexico’s Yucatan peninsula may change how the world values its coral reefs and the role of the financial sector in protecting and restoring natural landscapes.

In 2005, Mexico’s Caribbean coast was struck by two hurricanes, causing US$8 billion in damages and closing hotels and other businesses in Cancún long enough to cause further economic impact. But some hotels and beaches in Puerto Morelos suffered less damage than other areas in the state of Quintana Roo. Further analysis pointed to an important connection—Puerto Morelos was protected by a stretch of the Mesoamerican Reef.

A healthy coral reef can reduce up to 97 percent of a wave’s energy before it hits the shore.

This finding has implications for the estimated 840 million people around the world who live with the risk of coastal flooding. For these coastal communities, natural systems like coral reefs, beaches and wetlands provide the first line of defense against storms. In fact, a healthy coral reef can reduce up to 97 percent of a wave’s energy before it hits the shore, reducing both the effects of storm surge and daily erosion to coastlines.

But coral reefs can themselves be damaged by severe storms—especially those that have already been weakened by pollution, disease, overfishing and bleaching—which then greatly reduces the protection they offer for coastal communities.

To confront this threat in the Mexican state of Quintana Roo, various stakeholders—the state government, hotel owners, The Nature Conservancy (TNC) and The National Parks Commission—have come together to pilot an innovative conservation strategy. In 2018, Quintana Roo established the Coastal Zone Management Trust, which collects and manages funds for reef maintenance and repair. And in a global first, the trust has now purchased the first ever coral reef insurance policy to ensure these vital ecosystems are repaired after extreme storms hit.

This innovative funding system will help protect the region’s US$10 billion tourism industry, encourage the conservation of a valuable natural asset, and create a scalable new market for the insurance industry—a model which could be applied to other regions and ecosystems.

Unlocking Investment Mark Tercek, President and CEO of the Nature Conservancy, explains how an insurance policy could help restore coral reefs

How does it work?

The Coastal Zone Management Trust was established by the state government of Quintana Roo in Mexico, with participation of Mexico's National Commission of Natural Protected Areas, TNC and partners in the local science community and tourism industry.

The trust will receive funds from an existing fee paid by beachfront property owners, among other private and public sources. These funds will continue to finance repair and maintenance for Quintana Roo’s reef and beaches, in addition to paying for the reef’s new insurance policy. That policy’s coverage will extend across six municipalities and approximately 160 kilometers of coastline, including the towns of Cancún and Puerto Morelos. 

The insurance is a one-year parametric policy. This means that should wind speeds in excess of 100 knots hit a predefined area, an insurance payout will be made very quickly to the trust fund, allowing swift damage assessments, debris removal and initial repairs to be carried out. Longer periods of restoration and recovery work may follow to restore the reef’s value as a coastal barrier.

Reef Insurance Primer

How the reef insurance works


The divers who make up Quintana Roo’s inaugural post-storm brigades received first-response training through the partnership of the local community, the National Commission of Natural Protected Areas (CONANP), the Research Center for Aquaculture and Fisheries (CRIAP) and TNC. To ensure the best response possible, the board of trustees approves all projects based on input from an advisory committee formed by well-known scientists and experts. 

This initiative represents a crucial step in the development of financial mechanisms that protect nature and people. Extensive multi-stakeholder collaboration—including valuable guidance from reinsurer Swiss Re—helped take the idea of insurance for the Mesoamerican Reef from concept to reality.

  • Insuring Nature to Ensure a Resilient Futre: Coastal Zone Management Trust

    Infographic: Insuring Nature


    The Nature Conservancy is working with its partners to design and test innovative strategies to finance coral reef restoration and protection, which will in turn protect coastal economies and livelihoods. Descargar En Español

Coral reef in Solomon Islands
Colorful Coral Coral found while snorkeling off Kerehikapa Island. © Tim Calver

A Growing Opportunity

TNC is now working to replicate the model developed in Quintana Roo for other reefs and investigate whether other ecosystems such as coastal wetlands could benefit from a similar approach. To date, TNC has engaged with various partners including the United Nations Development Program, other international organizations and members of the insurance, reinsurance and international insurance brokers community. Prospective projects are currently being explored in the Caribbean, Asia, Australia and the United States. 

An emerging body of research suggests there’s a growing opportunity—and need—for this kind of innovation. A study authored by TNC scientists for the Journal of Marine Policy used a combination of data-driven academic research, as well as crowd-sourced and social media-related data to analyze all coral reef-based economies around the world and map those reefs by tourism revenue, ranging from US$1 million to US$40 million per square kilometer. The study found that coral reef tourism generates US$36 billion globally every year.

But that value doesn’t take into account the significant coastal protection benefits coral reefs provide to nations around the world. If just the top meter of a coral reef is lost, damages from storm surge could double or even triple. In the U.S. alone, coral reefs provide flood protection to over US$1.8 billion of coastal infrastructure and economic activity. With billions of dollars more of built capital protected by coral reefs from flooding around the world, it’s clear that there is a market ripe for financial products and mechanisms that would protect reefs and ensure greater coastal resilience.

More importantly, it’s clear that lives and livelihoods are at stake. Recent research suggests hurricanes could become more intense in the future, putting coastal communities at even greater risk. We can't afford to do nothing—literally.

For more information, questions or feedback, contact us at

TNC received generous support from the Rockefeller Foundation and Bank of America Foundation to develop the insurance concept and from Swiss Re Foundation for the development of a first responder protocol, reef restoration protocol and for training the Reef Brigades.


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