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Triple-I Blog | Mangrove insurance: Parametric + damages can help coastal resistance



Earlier this year I wrote about the role that mangrove forests and coral reefs play in mitigating tropical storm damage and how insurance can help protect these critical resources. A recent nature conservation study specifically examines opportunities in mangrove protection and restoration and identifies where insurances can be used to support their resilience.

In many places, mangroves are the first line of defense, their aerial roots helping to reduce erosion and disperse storm surge. In Florida, a study showed that mangroves alone prevented $ 1

.5 billion in direct flood damage and protected over half a million people during Hurricane Irma 2017, reducing damage by nearly 25% in mangrove counties. Another study showed that mangroves actively prevent more than $ 65 billion in property damage and protect over 15 million people each year worldwide.

Unfortunately, they often fall victim to developments that create the greatest potential for storm-related losses.

The conservation study describes the implementation of a coral reef insurance product in Quintana Roo, Mexico, and examines how the model can be adapted for mangrove conservation. In Quintana Roo, a trust fund accepts money from public, private and philanthropic sources, as well as a federal fee levied on beach property owners who want to use the beach for commercial purposes. It uses these funds to buy the insurance – a parametric product that is triggered if wind speeds in a certain area exceed 100 knots.

Parametric insurance covers risks without the complications of sending adjusters to assess damage after a disaster. Instead of paying for damage that has occurred, it pays if certain agreed conditions are met – for example, a certain wind speed or earthquake magnitude in a certain area. If coverage is triggered, a payment is made, regardless of damage. Rate rates and reduced administrative costs can reduce the burden on both insurers and policyholders.

"Unlike coral reefs, however, mangroves do not usually require rapid post-storm interventions to survive," the study says. This means that a non-life insurance can be created that delivers payments based on assessments of mangrove damage after the disaster. "There are a variety of insurance products available that can be tailored to meet the specific needs of mangroves, with initial payments quickly through parametric shifts and evaluated payments through compensation coverage at a later stage."

Before a mangrove insurance can be developed and distributed, a complete feasibility study would need to be carried out. The Nature Conservancy report recommends that this includes “higher-resolution flood risk models, estimation of wind-reducing benefits of mangroves, and construction of fragility curves to show the relationship between damage to a mangrove forest and any part of a storm event, such as storm surge or wind speed.


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