FAO releases review of world capture fisheries insurance
The FAO has released its 'Review of the current state of world capture fisheries insurance'
The FAO has recently released FAO Fisheries and Aquaculture Technical Paper No. 510, 'Review of the current state of world capture fisheries insurance'.
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 organised 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 small-scale 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 10 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.
The technical paper was written by Van Anrooy, R.; Ahmad, I.U.; Hart, T.; Hotta, M.; Ping, Y.; Yang, W.; Shipton, T.; Benoit, C.; Ruchismita, R.; Upare, S.; and Siar, S.V., and can be downloaded from http://www.fao.org/docrep/011/i0744e/i0744e00.htm