Climate insurance eyed for fisheries, tourism in Pacific islands

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By Ron Rocky Coloma

Pacific Island nations are exploring new climate insurance options to help fishers, tourism operators and small businesses recover faster after cyclones, flooding and other weather disasters, according to a regional assessment released through the Pacific Insurance and Climate Adaptation Program.

The study examined whether parametric insurance could work for the fisheries and tourism sectors in Fiji, Papua New Guinea, Solomon Islands, Samoa and Kiribati.

Unlike traditional insurance, parametric insurance automatically triggers payouts when weather thresholds such as cyclone winds, heavy rainfall or rough seas are reached, rather than requiring damage assessments.

Researchers said the approach could provide rapid financial support to communities and businesses after climate-related disasters, particularly in Pacific economies where fisheries and tourism are major sources of jobs and income.

“We see that there is a strong demand for climate risk protection across both sectors, tourism and fisheries, particularly when it comes to MSME business operators,” said Tuya Altangerel, UNDP and UNCDF resident representative for the Pacific office in Fiji.

Altangerel said earlier pilot insurance programs across Fiji, Solomon Islands, Papua New Guinea and Kiribati have already demonstrated the need for faster financial support following disasters.

“There is a very thin line as to whether your assets and business could be protected and recovered within a relatively quick timeframe because of the injection of cash through the automatic payout system,” Altangerel said.

According to the study, Pacific fisheries and tourism industries face increasing threats from tropical cyclones, storm surges, excessive rainfall, heat waves and changing sea conditions. Researchers estimated the insurance market potential across the five countries could range from roughly $20 million to $50 million annually in premiums.

Agrotosh Mookerjee, managing director and chief actuary of Risk Shield Consultants, said traditional insurance models often struggle in island nations because of the cost and logistical difficulty of verifying losses across scattered islands and remote communities.

“So when insured bad weather events occur, payouts would automatically be based on the index being used for the insurance,” Mookerjee said. “Essentially, in that process, there is no need for beneficiaries to report losses or for insurance companies to come and verify losses.”

The study identified different priorities for each country.

In Fiji, researchers recommended piloting tourism-related business interruption insurance for hotels, dive operators and tour businesses. Papua New Guinea’s proposals focused more on fishers, including products tied to unsafe sea conditions, to compensate workers for lost fishing days during rough weather.

In Solomon Islands and Kiribati, the study highlighted community-level fisheries protection and insurance linked to climate risks such as salinity, coastal inundation and reef damage. Samoa’s recommendations included combined tourism and fisheries insurance models for micro, small and medium-sized enterprises.

Researchers also said insurance products would likely require support from governments, banks, development agencies and community organizations to remain affordable.

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The study found willingness to pay insurance premiums was generally low unless policies were tied to business continuity, credit access or financing programs. Researchers recommended bundling insurance with loans, fisheries financing or tourism business services rather than selling it as a standalone product.

The report also called for stronger regulatory frameworks and improved climate and marine data systems across the Pacific to support future insurance products.

Altangerel said the broader goal is to help Pacific economies remain resilient as climate disasters and global economic disruptions become more frequent.

“So in this world of volatility, we need to be innovative and look at other ways of protecting our supply chains and ensuring that Pacific tourism and fisheries industries are able to continue running smoothly,” she said.

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