Insurance to protect and enable nature-based solutions

Construction All Risks Insurance

One such 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 protects the municipality, the water management agency, engineers and contractors against delivery delays and failures.

Parametric Hurricane

Research has shown that there is a connection between a healthy coral reef and the region's ability to sustain itself economically. In other words, if the Mesoamerican coral reef off the coast of Mexico's Yucatán Peninsula were to die as a result of pollution and storm damage, it would no longer be able to prevent beach erosion, which, in turn, would threaten the region's key source of income, tourism. Swiss Re partnered with The Nature Conservancy (TNC) and the state government of Quintana Roo to help protect the Mesoamerican coral reef, the second-longest barrier reef system in the world. The original parametric insurance solution developed was based on an analysis of the possible damage to the reef in the event of a severe hurricane and its payout pattern defined accordingly. The parametric insurance solution ensures a rapid disbursement of funds that enables trained community members to deal with reef damage following a severe storm. This insurance solution was the world's first transaction of its kind.

Parametric Drought and Typhoon

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. With China's vision of "Green is Gold" and commitment to net zero emissions by 2060, the GEP measurement plays an important role in supporting eco-friendly economic and social development. 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 (Hangzhou Bay) against typhoon and drought risks. The sum insured is based on the GEP value, measured by carbon sink and wetland maintenance and restoration cost.

Debt-for-Nature Swap

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.