Download - AQUA INSURANCE - General plus RAS
AQUACULTURE
INSURANCE
Offshore risks, Onshore Risks and Recirculating
Aquaculture Systems (RAS)
2013
What is Aquaculture
Aquaculture is the farming of freshwater and saltwater
organisms including molluscs (shellfish, etc), crustaceans
(shrimp, prawns, crabs, etc.) and aquatic plants (mainly
seaweeds).
Unlike fishing, aquaculture implies the cultivation of aquatic
populations under controlled conditions.
Due to the decline of most commercial capture fisheries
globally, coupled with expanding populations and
competition for land use, aquaculture is seen as one of the
best solutions to meet the shortfall in fisheries products and
to meet the growing global protein demand.
Aquaculture Potential
Aquaculture, probably the fastest growing food-producing sector,
now accounts for almost 50% of the world’s fish and is perceived
as having the greatest potential to meet the growing demand for
aquatic food.
Given the projected population growth over the next two decades, it
is estimated that at least an additional 40,000,000 tonnes of
aquatic food will be required by 2030 to maintain the current per
capita consumption.
[ ] FAO (Food and Agricultural Organisation of the United Nations) Rome 2006
Fisheries – Technical Paper 500
State of World Aquaculture
Species Farmed
There are currently about 430 species being farmed globally.
Of these there are a few that are cultivated on a scale to make
them commercially interesting to investors, and insurers.
The following are some of the species we either currently
insure, or which we consider a target species for insurance
products:
Salmon, Sea Bass, Sea Bream, Tilapia, Trout, Tuna, Cobia,
Abalone, Oysters, Sea Cucumber, Sea Urchin, Scallops, Mussels,
Shrimp, Prawn, Crabs, Sturgeon (Caviar)
Type of Cover Provided
‘All Risks’ Policy
Policy covering all risks of mortality unless specifically excluded
Widest type of cover available
Not globally available
Generally only offered for large commercial operations with a good track record, using species and technology familiar to insurers
Named Perils Policy
Only those perils defined within the policy will be covered.
Onus is on the assured to prove that the loss was a direct result of an insured peril
Policy more commonly found in cases where either the country, the farming system, or the species are not familiar to insurers
The main policy coverage is stock mortality or loss. Additional
covers can be provided to cover live fish transits.
Benefits of Aquaculture
Insurance
Protection against a variety of natural hazards beyond control, with
basic compensation for the loss of harvests
More secure incomes, greater stability and social & economic
welfare in the farming community
Improved access to investment capital and capital to expand
including formal credit by reducing the risk of non payment of
loans for the lending institutions
Increased incentives to invest in the development of their farms and
the adoption of technologies - thus reducing the potential for claim
Financial security for the Contract between the Farmer and Buyer
“Peace of mind for Farmers & Investors”
Types of Farming
Operations
On shore systems operated with
fresh or sea water:
a) Indoor tanks, ponds, recycling
plants
b) Outdoor tanks & “raceways”
c) Natural or excavated ponds
Tidal enclosures with:
d) Partial water exchange at high
tide
or
e) Constant water exchange
Offshore systems:
f) Floating cages
g)Midwater cages positioned
between the water surface
and seabed
On-Shore Systems Tidal Enclosures Off-Shore Systems
High water line
Low water line
a b c d e f g
Offshore Aquaculture
Offshore cage aquaculture makes up the majority of risks currently insured.
Although most production globally is undertaken onshore, either in lakes or ponds, most high value saltwater species are farmed in offshore cage systems
When considering ‘offshore’ locations, we would also consider the farming of species in cages, within a lake or other water body, an offshore risk.
Off-Shore farming offers a number of advantages including –
• High water quality, and exchange
• Low occurrence of extreme temperature fluctuations
• Less competition with other resource users , and reduced energy costs (i.e. electricity for pumping)
Typical Tuna Farm
Typical Tuna Farm
Typical Salmon Farm
Typical Salmon Farm cont.
Offshore Farming
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Salmon Farm in New Zealand
Basic cage designs
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Pollution.
Plankton bloom / red tide.
Jellyfish attack / bloom.
Theft and Malicious Acts.
Predation, or physical damage caused
by predators or other aquatic organisms
(not sealice or other ectoparasites).
Storm.
Lightning.
Tidal wave.
Collision.
Offshore Perils
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Sudden and unforeseen structural failure
of equipment.
Freezing, Supercooling, Ice damage.
Deoxygenation due to competing
biological activity or to changes in the
physical or chemical condition of the
water, including upwelling and High water
temperature.
Any other change in concentration of the
normal chemical constituents of the water,
including change in pH or salinity.
Disease.
On-shore Farming
The on land rearing of Stock can be achieved by raising stock in –
• Ponds with and without a supplementary water supply
• Raceways (long rectangular tanks)
• Fibreglass and or Concrete Tanks
Water Supply –
• Pumped water supply
• Water circulation systems including temperature control, current, oxygenation
and filtering
• A number of safeguards and backup systems can be integrated into the system
• Stocking density tends to increase in proportion to the complexity of the system
used
Flatfish farm in Spain
SA Abalone Farm
Shrimp ponds
Onshore Perils
Theft and Malicious Acts.
Predation, or physical damage caused by predators or other aquatic organisms (not ectoparasites).
Flood.
Tidal Wave.
Storm Damage.
Subsidence, Landslip, Structural Failure, Breakage or blockage of any part of the water supply system.
Drought.
Fire.
Lightning.
Explosion.
Earthquake.
Freezing, Frost damage, Frazil ice.
Mechanical breakdown or Accidental damage to machinery and other installations.
Electrical breakdown, Failure or interruption of the electricity supply, Electrocution.
Deoxygenation due to vegetation, microbiological activity or high water temperature.
Any other change in concentration of the normal chemical constituents of the water, including supersaturation with dissolved gases and change in pH or salinity.
Disease.
Recirculating Aquaculture
Systems (RAS)
Modern RAS facilities enable full control of the aquaculture
environment, from temperature, water flow, oxygen levels and
water quality.
Onshore recirculating systems are fully enclosed within a climate
controlled production building.
Water is treated through mechanical filtration, sterilised through
ozonation or UV treated, biofiltered, and oxygenated.
RAS Design
RAS continued
RAS facilities offer the following benefits for aquaculture:
Reduced influence of external factors (weather, air pollution,
diseases) on the production process
Optimum control of the culture environment – feed supply,
water temperature, water quality, oxygenation, organic loads
Biosecure production facility
On-site laboratory monitoring water quality and wellbeing of
the fish
Minimal waste discharge
Year round production of fish of consistent quality
RAS continued
RAS systems are now well understood and widely used in areas
where there are water pressures and the economics of the
species supports this method of farming, or where there are
environment concerns over open or offshore aquaculture
systems.
RAS systems have a high initial construction cost and have
higher running costs than other production systems,
however costs are coming down all the time
RAS Species
RAS Risks
Due to the high stocking densities required to make RAS
systems economically viable, when systems fail, this can
quickly result in a loss
Disease, once introduced to a system can spread rapidly unless
systems are designed appropriately. Difficult to eradicate
RAS systems are dependant on a good electricity supply, pump
operation and oxygenated water. A failure in any of these can
quickly result in losses. Appropriate back up and monitoring
systems are essential.
Human error is one of the most frequent causes of loss in RAS
systems. Trained and experienced personnel are essential.
Correct protocols must be developed and followed.
Features of Aquaculture
Claims and Loss Adjusting
Claims tend to be large and complex, especially when dealing with disease losses
Claims require specialist loss adjusters familiar with aquaculture
Losses are difficult to quantify accurately in terms of biomass present at the time,
natural mortality rates, and possibility of multiple loss events
Can involve high level of moral hazard dependent on basis of valuation and market
conditions
Farm records and audit trails can be incomplete or misleading
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Pricing
Every single aquaculture operation is different, and requires an individual rating
approach
When considering biological systems, not only must the natural hazards be
appreciated, but also the risks of disease, failure of life support systems, and moral
hazard due to widely fluctuating sales price, often generated by oversupply or the
price of raw materials (feed)
Rating matrices have been developed for types of operations, geographical location,
and species, however due to the ever changing nature of the industry, these are
having to be constantly reviewed and developed to cater for new species,
technology, and emerging producers
Rates are high, as are deductibles, reflecting the high risk nature of the class, and
reflecting the volatility of the claims pattern.
Rating
Typical rates range from 2% to 6% and deductibles of 25% per pond or
unit, to 20% or 30% per site
As well as proposal forms, surveys are now typically used far more to
assess both the physical risk to the site, and biosecurity.
High resolution mapping and GIS to map the are now used to estimate
risk profile.
Exposure tools such as NATHAN (Munich Re Natural Hazards
database) and Swiss Re CatNet are also used to assess risk
QUESTIONS?
Contact Details:
Daniel Fairweather
Email: [email protected]
Telephone: +44 (0) 20 3124 8436
Mobil: +44 (0) 7984 646 269