Insurance to protect natural assets and enable nature-based solutions

An example of a nature-based solution can be found on the island of Texel, a World Heritage Site in the Netherlands, which attracts one million visitors each year. It is considered the world’s largest tidal flat system and is protected by the Prince Hendrik sand dyke. To mitigate the risk of rising sea levels and avoid any danger of major failure, local authorities looked for an innovative concept which came from a dredging company. It placed five million cubic meters of sand and planted two million marram grasses to create a landscape gradient that not only protected the dyke from erosion but enhanced the local natural habitat. The project also delivered an additional EUR 1 million benefits in fish production, climate regulation and water quality regulation. The dredging company purchased a construction all risks insurance policy from Swiss Re, which also protected the municipality, the water management agency, engineers and contractors against delivery delays and failures.

The total economic value of the world’s reefs is estimated to be USD 9.9 trillion. Research has shown that there is a connection between a healthy coral reef and a region's ability to sustain itself economically. Furthermore, healthy coral reefs also provide protection against disasters and erosion. Mexico has regular hurricanes that severely impact the beaches and coral reefs. The state of Quintana Roo’s economy is highly dependent on the health of the Mesoamerican coral reef and the related tourism income. Both private and public sector were looking for a more reliable source of funding to support repair work from regular storm damage.

Swiss Re developed the initial solution, which insures a stretch of the reef and adjacent beaches along the Yucatan Peninsula, in collaboration with The Nature Conservancy and the State Government of Quintana Roo. As part of a public-private partnership, the Coastal Zone Management Trust (CZMT) was established to take out the insurance policy and continuously maintain the coral reef. The cover is triggered by wind speed within a pre-defined area. A payout is used by the CZMT to help fund the ‘Reef Brigades‘ – a team of local divers, marine biologists, and others who collect and mend the broken coral. Swiss Re Foundation provided a grant that supported the creation of the Reef Brigades.

Learn more about this coral reef hurricane cover.

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.

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.

Learn more about this typhoon and drought cover.

We are supporting the largest debt-for-nature swap of its kind, closed in 2023, helping to protect one of the most important marine ecosystems on Earth, the Galápagos. In debt-for-nature swaps a country's government bonds are bought up by a financial institution or specialist investor and replaced with cheaper ones, usually with the help of credit guarantees from a multilateral development bank. As those guarantees protect buyers of the new bonds if the country isn't able to pay the money back, the interest rate is lower, allowing the government involved to spend the savings on conservation. In this case, the debt conversion will generate an estimated $323 million for marine conservation in the Galápagos Islands over the next 18.5 years. A group of 11 private insurers including Swiss Re provide more than fifty percent reinsurance to facilitate the project. Overall, this project has been achieved through the collaboration and teamwork of the government of Ecuador, The Pew Charitable Trusts, U.S. International Development Finance Corporation, Inter-American Development Bank, Climate Fund Managers B.V., OFC, Credit Suisse, Swiss Re Corporate Solutions, Swiss Re Public Sector Solutions, and others.