Using innovative insurance to help protect the economic value of natural ecosystems
The challenge
Gross Ecosystem Product (GEP) is an index, measured after the Gross Domestic Product (GDP), that summarises the value of the contributions of nature to economic activity. The GEP measurement plays an important role in supporting eco-friendly economic and social development.
To support China’s vision of ‘Green is Gold’ and commitment to net zero emissions by 2060, local stakeholders were seeking a way to protect the GEP value of Ningbo City’s National Wetland Park (Hangzhou Bay) against typhoon and drought risks.
The solution
Swiss Re worked with the China Pacific Insurance Company and other parties to develop a parametric insurance solution that protects the GEP value of the National Wetland Park against typhoon and drought risks.
The sum insured is based on the GEP value, measured by carbon sink and wetland maintenance and restoration cost. In other words, the solution insures the Hangzhou Bay Wetland Park against any loss in ecosystem products.
Swiss Re provided:
- Incubation of the GEP insurance business model
- Development of the parametric solution using Swiss Re’s AIRMP platform
- Reinsurance risk transfer