The Great Barrier Reef needs to be insured to protect it from further deterioration, according to a report by global firm Clyde & Co.
Clyde & Co said the $56 billion tourism asset is in a “dire” state due to coral bleaching, sea level rises, ocean acidification, and pollution.
“Aside from being a World Heritage site, the Great Barrier Reef is an economic asset which provides jobs, income, and government revenue,” said Jacinta Studdert, partner at Clyde & Co. “Like other economic assets, it should be insured against certain catastrophic events to guarantee its long-term resilience. Failure to provide sound environmental management of the reef may lead to a wave of litigation. Those impacted by environmental pollution incidents are increasingly looking at litigation.”
The report said stewardship over the reef is the key to ensuring long term, sustainable opportunities to provide food security, employment, carbon sequestration, and coastal resilience.
It also proposed establishing a dedicated fund or parametric insurance cover to manage the risk of physical harm to the reef as well as the consequential economic and other losses.
“There is precedent in Australia and a number of other jurisdictions for using dedicated funds to manage risk, particularly in the context of terrorism risks,” said Avryl Lattin, corporate regulatory partner at Clyde & Co. “As climate-related weather risks become more prevalent, we are seeing innovations in the insurance market to cover specific weather or environmental events.”