A new feasibility study has proposed a first-of-its-kind insurance scheme to protect the Maldives’ coral reefs from climate-induced marine heatwaves. Jointly developed by the Maldives Monetary Authority (MMA), the United Nations Development Programme (UNDP) in the Maldives, and AXA Climate, the report explores how parametric insurance could offer rapid financial support when coral bleaching occurs.
Unlike traditional insurance, parametric models are triggered by measurable environmental data rather than damage assessments. In this case, satellite sea temperature readings would determine if a heatwave exceeds a threshold likely to cause coral bleaching. If triggered, the scheme would release funding for emergency reef response and restoration activities.
The study identifies coral bleaching from rising ocean temperatures as the most critical climate-related threat to Maldivian reefs. Past events in 1998 and 2016 caused widespread coral loss, with a similarly damaging episode recorded this year. According to the report, the growing frequency and severity of bleaching events makes the case for financial preparedness stronger than ever.
The report outlines various structures the scheme could take, including national-level coverage or pilot projects involving individual atolls, resorts, or conservation groups. A simulation based on Baa Atoll estimated an annual premium of USD 1.3 million to cover a portion of reef restoration costs. The insurance would not replace long-term conservation work, but complement it by ensuring rapid response funding after severe heat stress events.
The report also notes that while other reef insurance schemes exist globally, most are designed to address cyclone-related risks. In contrast, the Maldives faces heatwave-related coral damage, requiring a different kind of parametric model.
For implementation, the study recommends establishing a dedicated Conservation Trust Fund to act as policyholder and distribute funds during payouts. It further emphasises the need for robust monitoring systems, data collection, and coordination among government, resorts, and marine scientists.
The initiative is seen as a step toward embedding natural asset protection within the country’s financial risk planning and climate resilience strategy.
