MNAI is partnering with one of the world’s largest re-insurers, Swiss Re, and the Insurance Bureau of Canada (IBC), on a pilot project to develop insurance products that could provide new incentives for local governments to undertake natural asset management.
Once launched, the new insurance products would help Canadian local governments protect some of their natural assets such as forests and wetlands. Called parametric insurance, claim payments are triggered by a pre-defined event happening, instead of only paying out on actual losses or physical damage incurred after the event. For example, if a storm beyond a certain size occurred, the insurance payout could cover the cost of restoration for natural features such as wetlands, versus only covering damage to buildings and manufactured property.
The Canadian project is inspired by the Mexican Reef project, in which Swiss Re partnered with the Nature Conservancy and Mexican governments in 2017 to launch the world’s first nature-based insurance solution to protect Mexico’s Quintana Roo coral reef, the longest barrier reef in the western hemisphere. When a severe storm hit the reef, Swiss Re’s parametric insurance kicked in and disbursed funds that enabled community members to launch restoration actions and minimize coral damage.
Swiss Re has helped de-risk other nature-based infrastructure projects that could be replicated in Canada. For example, in 2019 Swiss Re provided construction and engineering insurance covers for a sand reconstruction project on the island of Texel in the Netherlands, where they moved 5 million cubic metres of sand to reduce the risk of erosion and improve the natural habitat. The insurance covers provided the local municipality with certainty that the project would be completed safely, on time and on budget.
MNAI will facilitate dialogue with, and feedback from, local governments to Swiss Re and IBC on the type of product they’ll most likely find effective and will also identify a group of local governments that may wish to pilot the new insurance products. MNAI’s goal in doing so is to increase the range and type of effective financial mechanisms available to local governments for natural asset rehabilitation and restoration.
To understand more about your local government’s challenges and needs, Swiss Re has prepared a short survey, which should only take a few minutes to complete. Click here to complete the survey.