LocationsThe Maldives Monetary Authority (MMA) and the United Nations Development Programme (UNDP) Maldives, with technical support from AXA Climate, have conducted a feasibility study exploring the potential for parametric coral reef insurance as means to deliver rapid financing support for the conservation of Maldives’ coral reefs.
The Maldives is the custodian to one of the world’s most extensive coral reef ecosystems, housing 3.14 percent of the planet’s coral cover, comprising over 2000 distinct coral reefs, over 250 unique coral species and over 50 genera. These systems are an essential safeguard for domestic livelihoods, with the flood protection service of coral reefs alone in Maldives valued at US$442 million or 8 percent of GDP per year. However, the escalating impact of climate change including rising ocean temperatures and extreme weather events pose severe threats to their survival and health of our oceans.
Feasibility study on Coral Reef Insurance
On 5 February 2025, stakeholders convened for a validation session to review the study’s findings. The session presented a mapping of the threats to Maldives’ reef systems and their insurability, the cost of restoration, potential programme designs and their premium financing models.
Maldives recorded extreme bleaching events in 1998, 2016 and most recently in 2024. While the extent of damage from the 2024 bleaching event is still being assessed, the devastation of these events has historically been severe - leading to the destruction of up to 60 percent of the country’s coral cover.
Following the 1998 bleaching event, and over an 18-year window, Maldives’ coral cover recovered from 6 percent to 65 percent, still below the pre-1998 levels at over 70%. This window has since more than halved to only 8 years between 2016 and 2024 stressing the capacity of our reefs to naturally recover. As ocean temperatures continue to rise, and as the horizon between these extreme events continues to shrink, Maldives’ coral reefs are facing an existential threat. Rapid financing through insurance can accelerate recovery and contain the severity of these event.
Feasibility study on Coral Reef Insurance
Enrico Gaveglia, UNDP Maldives Resident Representative, highlighted the urgent need for financial innovation in marine conservation:
“The inhabitants and biodiversity of the Maldives are integral to the country’s wealth. Climate change is depriving them of their natural environment, and the rapid decline of coral reefs has severe repercussions on ecosystems, fisheries, and the national economy. Protecting and preserving these critical ecosystems is at the heart of this initiative.”
The session saw discussions on the drivers of degradation affecting coral reefs in Maldives with extreme ocean temperatures having been identified as both insurable and as posing the greatest risk for coral reefs. The importance of pooling risk across the atolls in Maldives was also discussed with an emphasis being placed on scaling the insurance programme. The importance of collaboration between state, private sector and civil society actors was emphasized in the proposed frameworks mapping their roles in the insurance programme.
Feasibility study on Coral Reef Insurance
H.E. Ahmed Imad, Deputy Governor of MMA, underscored the broader economic implications of reef insurance, stating:
“The Maldives’ economy is heavily reliant on the tourism industry, particularly the resort sector, and our financial institutions are significantly exposed to these industries. To mitigate risks and enhance resilience, we need financial instruments that incorporate these natural assets, ensuring the long-term stability of both our economy and financial system.”
Coral reef insurance contributes to Maldives’ strategy of developing investment pipelines for sustainable finance. Maldives continues to pioneer innovative solutions to finance climate action with this study on parametric coral reef insurance. The full feasibility study is expected in Q1 2025 .