Swiss Re and Taiwan Fire & Marine Insurance have worked together to offer the first parametric aquaculture insurance solution to provide cover against extreme rainfall for onshore fisheries, in Taiwan’s Ping Tung Country.
The parametric insurance solution will provide cover for 120,000 hectares of Grouper fish ponds, making Taiwanese fisheries more resilient against flash floods, which could reduce fish stock and cause severe damage to the region’s economy.
The aquaculture insurance will be triggered when over 480mm of rain falls for two consecutive days, and uses meteorological data to enable faster payout – cutting time spent settling claims as well as uncertainty over quantified loss incurred.
Head of Property & Casualty for Hong Kong and Taiwan of Swiss Re, David Alexander, commented on the innovative solution; “Unlike traditional insurance which pays after the fish farmers make a claim by quantifying the losses they have incurred from the heavy rainfall and flooding, this insurance payout is based on a defined trigger, in this case the amount of rainfall experienced. This means that fish farmers can receive their payout faster, reducing the time that is needed in claims process and settlement.”
The launch of the parametric aquaculture insurance solution is the second insurance solution Swiss Re has introduced in Taiwan to provide agriculture cover, after the Taiwanese Government initiated the development of insurance for farmers and fisheries.
Harini Kannan, Head of Agriculture Reinsurance in Asia (ex-China), Swiss Re, explained; “When the warning signal of typhoon or rainfall is hoisted, fisheries can deploy means of risk prevention and mitigation actions, which would incur a cost. Fish farmers can now cover this cost through the aquaculture index-based insurance or use the payout to replace the damaged fish stocks.
“Through the mechanism of the parametric insurance, we want to build resilience for the local fisheries and close the protection gap of the aquaculture industry in Taiwan. We are proud to see that our first parametric aquaculture insurance solution has attracted strong interests, which we hope will benefit other countries within Asia in the near future.”
In 2009, the Ping Tung County’s fisheries had suffered a loss of nearly 50% of the fisheries sector and an estimated $56 million when a typhoon brought heavy downpours to the region.
The Taiwanese government has since called for increased agricultural risk transfer, launching initiatives to develop the protection of its agriculture sector.
And with Grouper being an expensive fish breed of the Ping Tung County and an economic asset in Taiwanese aquaculture industry, the launch of the first parametric aquaculture insurance solution is an important step towards protecting an important agricultural sector within the country’s economy, aiding development goals, and mitigating against potential impacts of climate change.
The parametric insurance solution has already proven to be hugely popular amongst fish farmers, as demand for onshore fish farm insurance booms.
This demonstrates the growing market for parametric insurance solutions, which have been highlighted in recent years as a growing re/insurance sub-sector, especially within developing re/insurance markets where microinsurance, or new InsurTech solutions are picking up pace to increase re/insurance penetration.