Hurricane Lisa’s landfall in Belize on November 2 triggered a parametric insurance policy that quickly provides funds to repair storm damage to the world’s second-largest barrier reef system.

The Mesoamerican reef system was affected when Lisa struck the Turneffe Atoll in the Caribbean Sea off the coast of Belize as a Category 1 storm. The event activated a $175,000 payout to finance immediate reef recovery and restoration.

The parametric product was developed by the Mesoamerican Reef Fund (MAR Fund) and WTW’s Climate and Resilience Hub, with the policy underwritten by AXA Climate and Munich Re and placed by WTW’s alternative risk transfer team.

Unlike traditional indemnity insurance, parametric structures cover risks without the complications and delays of sending adjusters to assess damage after an event.

Instead of paying for damage that has occurred, a parametric policy pays if certain agreed-upon conditions are met -- for example, a specific wind speed or earthquake magnitude in a particular area. If coverage is triggered, a payment is made, regardless of damage.