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Following decades of scientific research and exploration, today we have a vastly broader and deeper understanding of one of our planet’s defining features, its ocean. For all of us—from everyday citizens to corporate executives to policy makers—the data and insights from these studies are helping us comprehend, from multiple perspectives, both the critical importance of the ocean as well as the varied and escalating threats it faces.

Sifting through this escalating body of knowledge, one overarching conclusion is inescapable: the course of humanity will be shaped by the health of our ocean. Yet as the ocean warms, becomes more acidic and is increasingly strewn with plastics and other pollutants—along with the impacts of overfishing and coastal ecosystem degradation—the implications for the global economy and our physical wellbeing will be vast and potentially irreversible. That’s why AXA, as a leading global re/insurer, is using its resources and capabilities to devise solutions that help protect at-risk ecosystems, bolster resilience, and reduce ocean risk.

Creating innovative solutions is one of the main thrusts of AXA’s ambitious and multi-faceted Ocean Risk Initiative. In a previous article—Improving ocean literacy key to a sustainable future—we described how the Initiative is helping to “enhance ocean literacy at all ages and in all sectors so that current and future leaders will more readily and confidently incorporate sustainability and the ‘ocean perspective’ into business decisions and public policy debates”. This article outlines how AXA XL is collaborating with other organizations to create new finance and insurance solutions to help countries, communities and businesses manage and mitigate ocean-related risk and achieve greater resilience in the face of increasingly extreme climate events.

Protecting coastal communities naturally

Sea-level rise and population density projections indicate that 800 million people will be at risk of coastal flooding and storm surges by 2050, with further implications for economies and ecosystems around the world. However, mangroves, coral reefs, sea grass beds and other natural systems help to protect coastal environments while also providing considerable benefit to communities on the frontline of climate change.

Recent research, for instance, confirms and quantifies how mangroves and coral reefs can significantly reduce wave energy, thereby reducing coastal flooding and erosion. We now know, for example, that about 100 metres of mangroves can reduce wave heights by as much as 66 percent.  Moreover, without mangroves, which are being depleted at an alarming rate, it is estimated that more than 18 million people in coastal communities would incur an additional USD82 billion in flood damages every year.  Mangroves can also store up to 10 times more carbon per hectare in their soils than terrestrial forests.

Similarly, after two hurricanes pummelled Mexico in 2005 along its Caribbean coast—which contains the Mesoamerica reef, one of the world’s largest coral reef systems—analysts determined that, because of the protection provided by the reef, the town of Puerto Morales suffered less damage than other towns along the “Riviera Maya”.

For places like the Bahamas which count on mangroves to lessen the impacts of hurricanes, or tourist-reliant towns in Mexico which rely on a healthy coral reef both as a draw for tourists and to absorb wave energy, these natural ecosystems represent critical assets, and as such, need protection for the same reasons a company insures its factories, satellites or shipping vessels.

Innovative solutions for insuring natural assets

Viewing the ocean and select ecosystems as valuable assets that could be protected by insurance is a relatively new concept. This idea, and how to make it a reality, was one of the main topics discussed by participants at the Ocean Risk Summit in Bermuda in May 2018. The Summit, which brought together 200 leaders from across the political, economic, environmental and risk sectors, highlighted how insurance and finance organizations, with their expertise in risk modelling, risk transfer and investments, have a unique role to play in developing solutions to help build resilience.

One of the first applications of this concept was in Quintana Roo, the Mexican state that includes Cancun and the Riviera Maya. There, The Nature Conservancy (TNC) together with local governments, re/insurers and coastal property owners in the tourism industry developed the world’s first insurance policy for coral reefs. The coverage uses a parametric structure and payouts are triggered when windspeeds exceed established thresholds. This approach ensures that funds are released quickly, first for debris removal and initial repairs, then for restoration efforts where sections with compromised or dead coral are reseeded with “baby” corals grown in a lab. (Click here to read more about parametric insurance.)

With this case as a model, TNC and the Ocean Risk and Resilience Action Alliance (ORRAA) are looking into applying this type of product to other global reef systems. (ORRAA was formed following the 2018 Ocean Risk Summit. Its members include AXA, Ocean Unite, the Global Resilience Partnership and the Government of Canada. It also receives support from all G7 governments as well as development banks and stakeholders from the environmental, NGO and risk communities.)

In addition to building insurance for coastal ecosystems, it is essential for the insurance industry to recognise the role these ecosystems play in mitigating risk, specifically by reducing flood risk. Current flood risk models often do not incorporate these important risk-reduction benefits. To address this gap, AXA and its scientific partners are developing a framework to create an Ocean Risk Index to help insurers more accurately price risk and support risk management solutions that take into account how the loss or degradation of marine ecosystems will impact the exposure of coastal assets and business.

AXA is also supporting TNC in developing “blue carbon and resilience credits” that will enable purchasers to offset their carbon emissions. As with other CO2 offset schemes, the funds will go to ensuring the health of important coastal ecosystems. The challenge with these approaches is quantifying the amount of CO2 that a healthy coastal wetland can absorb so that the “credit” is equivalent to the purchasers projected emissions. (As noted previously, mangroves can store significantly more CO2 compared to terrestrial forests.) Research on this issue is ongoing and this program is expected to launch later this year. (Supporting such scientific research is another important part of the overall Ocean Risk Initiative.)

In summary, AXA’s Ocean Risk Initiative is an essential component of the company’s overall commitment to assessing, managing and mitigating ocean risk. The Initiative also provides an opportunity for AXA to collaborate with a variety of organizations and institutions to drive action for sustaining our ocean.


About the author: Chip Cunliffe is AXA XL’s Director of Sustainable Development. Chip established and manages AXA XL’s Ocean Risk Initiative which works to identify innovative insurance and finance solutions to the impacts and implications of ocean-related risk. In 2012, he launched AXA’s Ocean Education program. He is based in London and can be reached at


Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.