The ocean is changing faster than at any other time in history with implications for vulnerable coastal communities as well as significant costs to the financial sector. In the last ten years, the insurance sector has paid out over US$300 billion for coastal storm damage.
Launched in 2017, the AXA Ocean Risk Initiative aims to develop insurance-led solutions to risks caused by a changing ocean, with a focus on using nature to build resilience.
The Initiative is underpinned by three key focuses:
- Drive product innovation
- Lead the insurance industry’s response to ocean risk
- Increase and broaden ocean literacy
The insurance industry has a critical role to play in finding solutions to some of the world’s biggest challenges.
Driving Product Innovation
Developing solutions to ocean risk requires an innovative and entrepreneurial approach. We actively support early phase projects to deliver tangible outcomes. These projects include:
- The development of a Coastal Risk Index designed to quantify the protective benefits of coastal ecosystems and incorporate them into insurance risk models. The Index is currently being developed in partnership with scientific institutions, governments, NGOs and private sector stakeholders.
- With The Nature Conservancy, AXA XL is a founding partner to create Blue Carbon Resilience Credits - tradable credits that value the combined carbon sequestration and coastal protection resilience benefits of coastal wetlands;
- We have also partnered with The Nature Conservancy to develop a report on the feasibility of developing a mangrove insurance product, which assesses the risk reduction benefits of mangrove ecosystems, specifically through their ability to reduce flooding, wave energy, and erosion. The report examines the opportunities for parametric and indemnity products, and a combination of both, which would cover the cost of restoring mangroves after a severe weather event.
- We have supported the Stimson Center to develop the Climate and Ocean Risk Vulnerability Index, a scalable methodology to identify the coastal urban environments most at risk to the effects of climate change and ocean risks.
- Leading work on how the insurance sector can be a partner in reducing and preventing illegal, unreported, and unregulated (IUU) fishing.
Leading the Insurance Industry’s Response to Ocean Risk
Through the Initiative, and working with the Global Resilience Partnership and Ocean Unite, AXA XL is co-chairing the Ocean Risk and Resilience Action Alliance (ORRAA), a multi-sector collaboration aimed at driving $500 million of investment into nature-based solutions by 2030 through the development of innovative finance and insurance products. These products can be used as a critical component of disaster risk management and climate adaptation in countries that often lack the financial resources to fund relief, recovery and post-disaster reconstruction efforts.
The creation of the ORRAA was one of the most important and tangible outcomes of the Ocean Risk Summit, which was held in Bermuda in 2018. Around 200 high-level representatives from government, academia, global/regional development banks, leading NGOs and the re/insurance industry met to discuss options and opportunities for responding to the many challenges associated with the risks of existing and projected changes to the world’s oceans. AXA XL (previously XL Catlin) was proud to serve as Presenting Partner for this important event.
Increasing and Broadening Ocean Literacy
AXA XL is proud to support the expansion of ocean literacy across the world. Launched in 2011, Ocean Education provides free and publicly available award-winning lessons and teaching resources on the ocean which can be integrated into school curricula. We have so far reached over 8 million students in 96 countries, with resources translated into French, German, Spanish, Portuguese, Italian and Bahasa Indonesian.
The Ocean Risk Scholarship program funds PhD research into various areas of ocean risk. We are currently supporting students from the following universities: Exeter, Marine Biological Association, Plymouth, Plymouth Marine Laboratory, Sheffield and the Scottish Association of Marine Sciences.