AXA COLPATRIA, AXA Climate, Fondo Acción, and WTW Alternative Risk Transfer, have jointly designed a parametric insurance programme to protect coral reefs in the Colombian Archipelago of San Andrés, Providencia and Santa Catalina.
In this effort, the coalition of partners is being supported by the Ocean Risk and Resilience Action Alliance (ORRAA) and the MAR Fund, with funding provided by the Blue Action Fund.
"Part of a UNESCO World Heritage Site and Biosphere Reserve, this Archipelago is a nature and climate refuge of global significance with a marine area covering nearly 10% of the Caribbean Sea. It is home to over 250 species of fish and nearly 60 coral species, making it the second-largest reef system in the Caribbean -- and a key place for conservation," AXA explained.
The parametric initiative, developed in response to the growing threats that hurricanes pose to coral reefs, is designed to be replicable in other vulnerable coastal regions.
"Through this joint initiative, the partners have co-developed a cutting-edge parametric insurance solution. The concept is simple: when predefined triggers -- such as wind speed thresholds -- are met, the insurance is automatically activated, and funds are released shortly after. This mechanism enables fast and transparent payouts, providing support when it is needed most," AXA observed.
Virgil Salmon, Senior Parametric Underwriter at AXA Climate, commented, "This model could, for instance, trigger an automatic payout of 80% of the insured value in a scenario similar to Hurricane Iota, with funds used directly for reef restoration."
Juanita Blanco, Director Latam/CAC Alternative Risk Transfer Solutions at WTW, said, "This solution is providing coverage for biodiversity in ways that traditional indemnity insurance simply can't.
"Parametric insurance plays a key role in closing that coverage gap. We're proud to have created and developed this program for San Andrés, Providencia and Santa Catalina, helping to preserve the ecosystem -- especially the coral reefs -- that support the island's life, tourism, and economy."
Natalia Arango, Executive Director of Fondo Acción, noted, "This partnership shows that innovative finance can help us respond swiftly to climate impacts while strengthening the resilience of ecosystems and communities."
Markus Knigge, Executive Director of Blue Action Fund, said, "This project demonstrates how climate insurance can serve as a powerful lever for both ecological and community resilience. It's not just about protecting reefs -- it's about strengthening local capacity to cope with future climate impacts."