Swiss Re & UNDP Partner to Launch Coral Reef Protection Insurance in Indonesia

Supported by UNDP’s Insurance & Risk Finance Facility (IRFF), Swiss Re has joined forces with the Indonesian government to launch a parametric coral reef insurance product for the Gili Islands. This innovative project operates under the new Marine Biodiversity Trust (Blue Window) framework established by Indonesia's Ministerial Regulation No. 27 and managed by the Indonesian Environmental Fund Management Agency (BPDLH).

Why It Matters

Global biodiversity hotspot: Indonesia holds 72% of the world’s coral varieties, and reefs here generate over US $3 billion annually while protecting coastal communities from storms and erosion.
Community impact: The Gili Islands support local livelihoods through tourism, fishing, and farming—many residents earn less than US $15 a day.
Nature-as-infrastructure model: Healthy reefs absorb wave energy and help prevent property damage, offering cheaper and more sustainable coastal defense than seawalls.

How It Works

Parametric trigger: Pre-defined environmental thresholds (e.g., storm intensity) automatically trigger payouts—bypassing slow, traditional damage assessments.
Rapid restoration funding: Upon trigger, funds flow through the Marine Biodiversity Trust to finance reef recovery and cleanup by local restoration teams.
Shared funding model: Premiums come from a mix of public, private, and third-party contributions—optimized by the new regulation, which enables offshore financing.

Broader Implications

Scalable blueprint: Designed as a pilot, the project aims to serve as a prototype for reef regions in other climate‑vulnerable nations.
ESG and ecosystem finance: Demonstrates how parametric insurance can bolster nature-based solutions, enhance biodiversity conservation, and meet SDG 14 (Life Below Water) goals.
Regulatory innovation: Indonesia’s legal framework now supports natural capital financing mechanisms—potentially a global precedent.

Next Steps

Final product rollout: Swiss Re has completed data collection in the Gili Islands; product design and testing are in progress.
Community engagement: Local governments and reef custodians will be involved to ensure culturally appropriate and effective deployment.
Regional rollout: Efforts underway to replicate the model in reef-rich countries across Asia-Pacific—potentially the Caribbean, Maldives, and beyond.

Final Thoughts

This initiative marks a major milestone in climate-resilient insurance innovation—melding environmental conservation with financial engineering. By treating reefs as insurable public assets, it showcases a new frontier where insurance drives environmental stewardship. As global nature-based insurance evolves, this project may well set the standard.