Review of the current state of world capture fisheries insurance

FAO Fisheries and Aquaculture Technical Paper 510

Review of the current state of world capture fisheries insurance


by

Raymon van Anrooy
Imtiaz Uddin Ahmad
Trevor Hart
Masamichi Hotta
Ying Ping
Wei Yang
Tom Shipton
Christine Benoit
Rupalee Ruchismita
Suchitra Upare
Susana V. Siar

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS
Rome, 2009

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ISBN 978-92-5-106228-9

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© FAO 2009

Van Anrooy, R.; Ahmad, I.U.; Hart, T.; Hotta, M.; Ping, Y.; Yang, W.; Shipton, T.; Benoit, C.; Ruchismita, R.; Upare, S.; Siar, S.V.
Review of the current state of world capture fisheries insurance.
FAO Fisheries and Aquaculture Technical Paper. No. 510. Rome, FAO. 2009. 162p.

Abstract

Capture fisheries in marine and inland areas involve risks. Examples of major risks in capture fisheries include asset risks, such as the loss or damage to fishing vessels, as well as to equipment and gears as a result of natural disasters. Insurance is considered an important tool in the risk management of capture fisheries activities. Vessel insurance of marine capture fisheries vessels is available in many countries, but this is not the case for vessels and equipment used in inland capture fisheries. A decade ago, the Food and Agriculture Organization of the United Nations (FAO), the Asia-Pacific Rural and Agricultural Credit Association (APRACA) and the National Federation of Fisheries Co-operative Associations (ZENGYOREN) of Japan organized the Regional Conference on Insurance and Credit for Sustainable Fisheries Development in Asia (Tokyo, November 1996). It was shown that although in the past small-scale marine capture and inland capture fisheries have received very little attention from the insurance sector, a clear need for the service was expressed by fisherfolk in the region. This need was confirmed again at the Regional Workshop on Guidance for Credit and Microfinance Programmes in Support of the Sustainable Use of Inland Fisheries Resources and Poverty Alleviation held in Beijing in February 2006.

The FAO Fisheries and Aquaculture Department decided to carry out this world review in recognition of the opportunities fisheries insurance services can offer to the sustainable development of capture fisheries in the developing countries. The review covers the following regions and countries: Asia (China, Japan, India), Africa (Mauritania, Morocco, Namibia, South Africa, ), Europe, the Russian Federation, the United States of America, South America (Peru, Chile) and Oceania (New Zealand, Australia).

This world review revealed that in Europe, North America, Oceania and South America, large composite private sector insurance companies often dominate the fisheries insurance market, whereas in Asia, public sector insurance companies are the ones playing a major role. The FAO State of World Fisheries and Aquaculture 2006 estimated that the world fishing fleet consists of about 4 million vessels, of which 1.3 million fishing vessels are decked vessels of various types. It is difficult to provide an accurate number of fisheries insurance policies, but this review has estimated that around 500 000 fishing vessels are covered by marine hull insurance at present. Many international insurers have linkages with the London markets where the Institute Fishing Vessel Clauses are promulgated, and these clauses are widely used throughout the industry. The “all risks” type of policies are most common, but the “named perils” policies are also frequently used, depending on the coverage desired by the individual fishing vessel owner and the costs of the policy coverage offered by insurers.

In Europe, Oceania and Japan, all types and sizes of fishing vessels can be insured. In South America, China, India and Africa, and to a lesser extent in the Russian Federation, it is generally more difficult to obtain insurance for smallscale vessels than for larger ones. International insurers of fishing vessels generally also offer coverage of machinery, fishing gears, processing equipment, electronic systems and lifeboats. In most regions and countries, fishing vessel insurers can underwrite individual vessels (or any single risk) from US$1million up to US$1.5 million or more. All fishing vessel insurers have risk assessment procedures in place, and both private and public insurers carry out risk management surveys. Over the last decade, underwriting experiences in the fishing vessel insurance class of business have varied widely, but seem to have improved in Europe and in the Russian Federation. They are generally good in Oceania and Africa, and generally balanced in China and Japan. In India, underwriting experiences were poor from 2004 to 2005, as a consequence of the December 2004 earthquake, which was followed by a tsunami. In the same year Japan was hit by ten typhoons, which caused high losses to the Japanese basic fishing insurance scheme. While fishing vessel insurance showed diverse results, Protection and Indemnity (P&I) and group life and accident insurance schemes showed underwriting results that generally were positive in the regions and countries included in the survey.

Contents


Part 1 (Download 631 kb)

Preparation of this document
Abstract
Abbreviations and acronyms
Contributors
Acknowledgements

Part 2 (Download 752 kb)

1.  Introduction and review objectives
Objectives of the review
About this document
References
2.  Summary overview of the current state of world capture fisheries insurance
2.1   Introduction
2.2   Short summary of capture fisheries production in the world
2.3   The insurance market
2.4   Demand and supply issues
2.5   Policies in force
2.6   Perils covered
2.7   Vessels insured
2.8   Equipment and gears insured
2.9   Underwriting
2.10  Risk management
2.11  Handling of claims
2.12  Underwriting experiences
References
Annex 1 – Questionnaire for primary insurers
3.  The current state of capture fisheries insurance in China
3.1   Introduction
3.2   The insurance market
3.3   Demand and supply issues
3.4   Policies in force
3.5   Perils covered
3.6   Vessels insured
3.7   quipment and gears insured
3.8   Underwriting
3.9   Risk management
3.10  Handling of claims
3.11  Underwriting experiences
3.12  Conclusions
3.13  Recommendations
References

4.  The current state of capture fisheries insurance in Japan
4.1   Introduction
4.2   The insurance market
4.3   Demand and supply issues
4.4   Policies in force
4.5   Perils covered
4.6   Vessels insured
4.7   quipment and gears insured
4.8   Underwriting
4.9   Risk management
4.10  Handling of claims
4.11  Underwriting experiences
4.12  Conclusions
4.13  Recommendations
References
Annex 1 – Welfare insurance
5.  The current state of capture fisheries insurance in India
5.1   Introduction
5.2   The insurance market
5.3   Supply and demand issues
5.4   Policies in force
5.5   Perils covered
5.6   Vessels insured
5.7   Equipment and gears insured
5.8   Underwriting
5.9   Risk management
5.10  Handling of claims
5.11  Underwriting experiences
5.12  Conclusions
5.13  Recommendations
Annex 1 – Fish production data for the past 15 years
Annex 2 – Fisherfolk population by state
Annex 3 – Vessel type and number by state
Annex 4 – Details of the Tsunami Jan Bima Yojna
               (Tsunami affected people insurance scheme)
Annex 5 – Welfare funds
6.  The current state of capture fisheries insurance in Europe
6.1   The insurance market
6.2   Supply and demand issues
6.3   Policies in force
6.4   Perils covered
6.5   Vessels insured
6.6   Equipment and gears insured
6.7   Underwriting
6.8   Risk management
6.9   Handling of claims
6.10  Underwriting experiences
6.11  Conclusions
6.12  Recommendations
7.  The current state of capture fisheries insurance in South America
7.1   Introduction
7.2   The insurance market
7.3   Demand and supply issues
7.4   Policies in force
7.5   Perils covered
7.6   Vessels insured
7.7   Equipment and gears insured
7.8   Underwriting
7.9   Risk management
7.10  Handling of claims
7.11  Underwriting experiences
7.12  Conclusions
7.13  Recommendations
References
8.  The current state of capture fisheries insurance in South America
8.1   South Africa
8.2   Namibia
8.3   Morocco
8.4   Mauritania
8.5   The insurance markets
8.6   Demand and supply issues
8.7   Policies in force
8.8   Perils covered
8.9   Vessels insured
8.10  Equipment and gears insured
8.11  Underwriting
8.12  Risk management
8.13  Handling of claims
8.14  Underwriting experiences
8.15  Conclusions
8.16  Recommendations
References
9.  The current state of capture fisheries insurance in Oceania
9.1   Introduction
9.2   The insurance market
9.3   Demand and supply issues
9.4   Policies in force
9.5   Perils covered
9.6   Vessels insured
9.7   Equipment and gears insured
9.8   Underwriting
9.9   Risk management
9.10  Handling of claims
9.11  Underwriting experiences
9.12  Conclusions
9.13  Recommendations
References
10.  The current state of capture fisheries insurance in the United States of America
10.1   Introduction
10.2   Short summary of capture fisheries production
10.3   The insurance market
10.4   Policies in force
10.5   Perils covered
10.6   Vessels insured
10.7   Equipment and gears insured
10.8   Underwriting
10.9   Risk management surveys
10.10  Claims handling
10.11  Underwriting experiences
10.12  Conclusions
10.13  Recommendations
References
11.  The current state of capture fisheries insurance in the Russian Federation
11.1   Introduction
11.2   The insurance market
11.3   Demand and supply issues
11.4   Policies in force
11.5   Perils covered
11.6   Vessels insured
11.7   Equipment and gears insured
11.8   Underwriting
11.9   Risk management
11.10  Claims handling
11.11  Underwriting experiences
11.12  Conclusions
11.13  Recommendations
References
12.  Conclusions and recommendations
12.1   Conclusions
12.2   Recommendations
Part 3 (Download 524 kb)

Appendix 1 – Marine insurance: the London market and the institute clauses
                        on deep-sea fisheries in the high seas