Willis and Caribbean Biodiversity Fund pilot first-of-its-kind coral reef parametric insurance programme

Willis, a WTW business, and the Caribbean Biodiversity Fund (CBF) today announced the launch of a market-first parametric insurance programme to protect Caribbean coral reefs. Capacity is to be provided by Liberty Mutual, with technical assistance and co-finance support from the InsuResilience Solutions Fund (ISF).

Coral reefs in the Caribbean are among the most ecologically and economically significant ecosystems in the region. Despite their critical importance, reef ecosystems face accelerating threats, including from increasingly damaging hurricanes.

Working in collaboration with the CBF, Willis’ Alternative Risk Transfer Solutions team designed the pilot parametric policy, which is in place for the 2026–2027 Atlantic hurricane season and covers 1,800km2 of corals reefs stretching along the coasts of the Dominican Republic, Jamaica, St. Lucia, and St. Vincent and the Grenadines.

The Willis parametric policy introduces a “Dynamic Cat-in-Circle” structure that considerably reduces “near miss” hurricane events present in traditional Cat-in-Circle policies. In a traditional structure, a fixed area is defined around an insured location, with payouts triggered if the hurricane eye enters that fixed area. A “near miss” occurs when the storm narrowly misses that fixed area, resulting in no payout despite impacts.

The “Dynamic Cat-in-Circle” solution instead adjusts the insured area based on the hurricane’s size, using the radius of maximum winds (the distance from the eye to peak winds). This creates a variable, storm-specific insured area. As a result, if the insured location is hit by the hurricane’s strongest winds, a payout will be made. Additional concentric circles with lower payouts further align cover with a hurricane’s wind footprint.

Kaniescka Yogeswaran, Manager, Alternative Risk Transfer Solutions, Willis, said: “Helping to design the first ‘Dynamic Cat-in-Circle’ parametric policy for coral reefs in the Caribbean has been a rewarding challenge. With climate change-related natural hazards increasing in scale and frequency, this type of ground-breaking solution enables the rapid deployment of resources to help repair critical ecosystems and restore services following a major event like a hurricane.”

Karen McDonald Gayle, CEO of the Caribbean Biodiversity Fund, said: “The Caribbean Biodiversity Fund is thrilled to pilot this world-first coral reef insurance policy. In the Caribbean, the health of our coastlines and communities is directly tied to the health of the coral reefs surrounding our islands. By investing in nature, our insurance and finance partners are demonstrating its value as a critical natural, cultural and economic resource.”

Following the Mesoamerican Reef Fund’s (MAR Fund’s) successful application of parametric insurance to manage hurricane risk to the Mesoamerican Reef, also designed by Willis and co-financed by ISF, the CBF has partnered with Willis, MAR Fund, and four Caribbean National Conservation Trust Funds (NCTFs) to pilot the programme. Liberty Mutual has been confirmed as the insurance capacity provider following a competitive placement process.

Because payouts are triggered by independently verifiable hurricane parameters, rather than by damage assessment, funds can be disbursed quickly within the window for effective reef response. This parametric insurance is designed to ensure funding gets to where it is needed, when it is needed. Swift clean-up, coral stabilisation, and restoration following a damaging event have been shown to have positive impacts on coral survival and recovery, and therefore reef health.

The aim of this year’s pilot is to demonstrate that parametric insurance can be effectively applied to support reef conservation in the Caribbean island context. Accordingly, current coverage is modest with a US$1,000,000 policy limit across the four participating countries, which is limited relative to the scale of hurricane risk faced by Caribbean reefs. Premiums for this financial protection are being co-funded by ISF, with a longer-term premium financing strategy to be developed during the project.

The ultimate ambition is a validated, scalable, and sustainable financing model to close the funding gap after hurricane damage to all Caribbean reefs, protecting the coastal communities, fisheries, and tourism economies that depend on them across the region.
Charlotte Belin, Senior Underwriter at Liberty Mutual, said: “Liberty is proud to provide the insurance capacity for this pioneering programme and to support a solution that recognises the vital role coral reefs play in the resilience of Caribbean communities and economies. We hope this pilot will demonstrate how insurers can work alongside conservation and finance partners to develop scalable protection for natural assets.”

Dr. Annette Detken, Head of InsuResilience Solutions Fund (ISF), added: “Healthy coral reefs are essential for protecting livelihoods, supporting biodiversity and strengthening the resilience of coastal communities across the Caribbean. This partnership demonstrates how innovative risk financing can help safeguard natural capital by ensuring funding is available immediately after disasters strike. At ISF, we are proud to support solutions that strengthen resilience while protecting ecosystems that communities and local economies depend on.”

Coverage area: 1,800 km² of coral reefs along the coasts of the Dominican Republic, Jamaica, Saint Lucia, and Saint Vincent and the Grenadines