渔业养殖在亚洲发展兴旺

Fish farming is booming in Asia

The aquaculture industry in Asia is booming but the sector remains largely unprotected, offering significant opportunities for insurers

The world’s top five aquaculture-producing countries are all in Asia, with China leading the way with a massive 36.7m tonnes of fish in 2010, dwarfing the second-biggest producer, India, at 4.6m tonnes.

Overall, 90% of the fish we eat is produced in Asia, while the continent has also been responsible for 92.5% of increases in global production in the past 20 years.

But despite the strong growth in aquaculture in the region, in addition to its importance in terms of both food security and employment creation, the majority of the Asian industry is uninsured.

Insurance deficit
 Jason Scott, head of aquaculture and livestock at Hong Kong-based broker FP Marine Risks, says: “There is very little aquaculture insurance in Asia. There have been some pilot projects over the years and some government subsidy schemes, but the majority of the industry is underinsured.”

Given the level of underinsurance, it is difficult to calculate how much premium income the sector could generate. The Chinese agriculture insurance industry generates around $6bn a year in premium income, and Scott estimates aquaculture insurance could be worth around half this amount.

Paddy Secretan, managing director of AUMS, adds that growth for the insurance industry in the aquaculture sector could be “exponential” if it can model the right products. But he cautions: “The insurance industry has got to change and develop a lot of new products.”

Scott agrees that one of the reasons aquaculture cover has failed to take off in Asia is that the products currently available are not suitable for the region. Only a handful of providers offer aquaculture insurance and they are all based in Europe, although some major Chinese insurers are showing an interest in developing products.

The traditional policies are focused on a few high-value species, such as salmon and tuna, predominantly in sea cage farming.

Small farms
 The Asian industry is focused on different species compared with Europe, such as shrimp, while it also has a different structure to in the West. Scott says: “In Asia there are two tiers. There are larger, more sophisticated companies that are trading on an international market, then there are the thousands and thousands of small-scale farmers."

“You need a very different product for the two different tiers. The larger ones have more in common with products that are currently available. The smaller ones are likely to need government subsidies and programmes that are done in very different way.”

Secretan thinks the insurance industry has been too focused on the big producer and has lost track of the hundreds of thousands of small farmers who successfully run their businesses without big losses. “They are faced with rates, terms and conditions which to them are just totally unrealistic,” he says.

Reto Schneider, director of insurance and specialty risks at Swiss Re, points out that even where insurers are expanding into new markets, they do not have much data to set prices.

Meanwhile, there are numerous risks that insurers need to factor in, including jellyfish, predators, disease and pollution, in addition to damage caused by storms and tidal waves, and losses due to algae blooms and water salinity. Schneider adds: “Other challenges include remote areas that are not accessible, and insuring completely new species.”

Another challenge is that the cover is not well understood by many small-scale aquaculture farmers, for whom it may be the first insurance product they have ever bought – so education is key. Scott says: “We at FP Marine are very actively educating and working with local insurers to develop innovative solutions, as it is crucial to have a good local partner.

“The big Chinese companies are beginning to get involved because they see the opportunities, and the government is keen to protect the aquaculture industry as it is vital for sustainable food security.”

As part of this push to move aquaculture cover up the agenda, the first ever Asian Aquaculture & Risk Management conference was held in Hong Kong in May this year.

But Secretan points out that other issues also need to be sorted out if the cover is going to be successful in Asia. He says: “The law has got to be right for both insurers and the aquaculture industry. If you are going to stop a disease in its tracks, you may need compulsory slaughter – but who will compensate for that? The availability of drugs to treat disease, the ability of the authorities to restrict movements of stock, and a comprehensive veterinary and laboratory infrastructure are also important issues.”

Distribution is also a challenge, as many farmers are in remote and inaccessible areas. Schneider says: “We have to build up a completely new distribution channel. In Vietnam, government representatives went through People’s Committees in various provinces, but government people are not insurance people, so a lot of training was needed to make them familiar with our products.”

Affordability
 Another crucial issue is having government premium subsidies, otherwise affordability is likely to be an issue for small farmers. Schneider says: “When you really want to grow in small-scale farms with new countries and new species, you need government support, otherwise it probably will not work.”

He adds that there are pilot schemes in China and Vietnam where the government subsidises part of the premium.

Paul Koronka, chief executive of Regis Mutual Management, thinks encouraging small-scale farmers to develop mutual would also help increase the levels of aquaculture insurance cover in Asia. He says: “Mutuals are naturally suited to aquaculture. It is quite a powerful mechanism for broadening the access-to-insurance market."

“It is a natural bolt-on to existing co-operatives and it is good for all sides of the insurance industry to become aligned with a well-structured mutual.”

Koronka believes well-structured mutuals are self-selecting, while cover can be tailored to members’ needs and there is no cross-subsidisation of poor risk. He adds: “It also encourages the reinsurance market to engage, because it can see a self-selecting pool of business. It raises standards across the industry."

Meanwhile, there is talk of developing index-insurance for aquaculture to enable fast payouts. “Index insurance is possible in some areas for aquaculture insurance,” says Schneider. “It is possible to make a model and correlate mortality with pollution. It can also be done with wind speed and typhoon damage. However, it will not be a super-sophisticated model and it cannot be done with disease.”

There is much to consider and plenty of opportunity for aquaculture insurance to develop in Asia.