Eric Usher
Head, UN Environment Programme Finance Initiative
This article originally featured in the New Scientist magazine on 5th December’
Discover the three ways insurers can support ecosystem protection and restoration in developing countries, both in their role as insurance providers and as investors.
Following COP29, the focus on financing climate action in developing countries highlights an opportunity for insurers to play a vital role in ecosystem restoration. Many are adopting insurance for nature-positive solutions to manage environmental risks while actively protecting and restoring ecosystems.
Supporting coral reef conservation through parametric insurance
Coral reefs serve as natural barriers against storms. They offer vital services, such as flood control and water filtration. Principles for Sustainable Insurance (PSI) signatory, Willis Towers Watson, has launched insurance products that support reef conservation in Belize by paying for losses associated with hurricane damage.
A particular product, parametric insurance, ensures immediate recovery of funds and long-term resilience. It integrates innovative financial mechanisms to support climate adaptation and disaster response. For instance, the parametric insurance solution in Quintana Roo, Mexico protected the Mesoamerican Barrier Reef and paid out for the first time in 2022. This involved coastal tourism businesses, property owners and local municipalities, safeguarding 160 kilometres of coral reefs from storm damage.
Insurers can support sustainable
food systems and ecosystem
restoration in developing countries.
Promoting sustainable food systems
Insurers can support sustainable food systems and ecosystem restoration in developing countries. They do so by using financial mechanisms such as microinsurance schemes, green bonds and climate funds. These attract investments from the public, private and philanthropic sectors. This covers areas with low purchasing power but high insurance needs, especially for small-scale farmers and businesses.
Investing in mangrove restoration
Mangrove forests are vital for coastal protection, carbon storage and biodiversity. Insurers can invest in projects such as those by the Restoration Insurance Service Company (RISCO) in the Philippines. These projects restore mangrove ecosystems, protecting coastlines from storm surges and reducing insurance risks related to coastal erosion. By focusing on mangrove restoration, insurers align with COP29’s emphasis on nature and biodiversity, creating natural defences against climate impacts.
By integrating these forward-looking strategies, insurers can play a crucial role, not only in protecting ecosystems but also in enhancing the resilience of developing communities and economies against climate change risks.
Find out more about UNEP FI’s Principles for Sustainable Insurance and Nature team on unepfi.org
