The key to cracking the aquaculture insurance problem lies in fiscal subsidies and catastrophic disaster relief

In recent years, coastal areas such as Fujian and Zhejiang have frequently been hit by natural disasters such as typhoons and red tides, dealing a heavy blow to fishery production. After a disaster, it is very difficult for fishermen to resume production relying only on government relief. How to give play to the function of mutual insurance and rely on the market to promote the steady development of fisheries has attracted much attention.

Aquaculture insurance can prevent fishermen from being “impoverished by disaster”

Since May, the coastal areas of Fujian Province have entered a period of high incidence of red tides, and large numbers of farmed abalone and oysters have died. According to preliminary statistics, the number of affected fishermen in Lianjiang, Pingtan, Fuqing, Putian and other places has reached more than 10,000 households.

The reporter learned during interviews about post-disaster production recovery in severely affected areas such as Pingtan and Lianjiang that, because the losses from the disaster were severe, many fishermen lost everything and were unable to resume production. Zhuo Ronglan, a fisherman in Su'ao Town, Pingtan County, said that her family borrowed money at high interest to farm abalone, raising a total of 50 baskets and more than 2,000 cages, with an investment of more than 2 million yuan, and almost all of them died, so not a single cent could be recovered, and they did not even have the money to buy seedlings again.

According to the Fujian Province Fishery Mutual Insurance Association, aquaculture insurance is basically nonexistent nationwide at present, and fishermen affected by disasters can only seek government disaster relief and cannot obtain compensation from insurance companies.

Fujian is an area with a high incidence of natural disasters. Every year there are six or seven typhoons, and in recent years, as environmental pollution has worsened, red tides have also occurred from time to time. Many affected fishermen hope that aquaculture insurance can be introduced to reduce disaster losses. “We fishermen want to pay for aquaculture insurance. That way, if we suffer a disaster, we can still get a little subsidy.” said Wei Kexing, a fisherman from Fenwei Village, Pingtan County.

⟦NL> Liu Jianxiong, general manager of the Agriculture Department of PICC Property and Casualty Company Limited (Fujian), said that aquaculture insurance can at least give disaster-affected fishermen funds to purchase equipment, seedlings and so on, enabling them to resume reproduction and preventing them from being “impoverished by disaster.” However, because aquaculture is highly dependent on the natural environment and involves catastrophic disaster risks, the domestic aquaculture insurance market has ended up in a situation where insurance institutions dare not underwrite and aquaculture farmers cannot afford the high premiums.

Four major dilemmas cause aquaculture insurance to be “stillborn”

According to the reporter's understanding, the current promotion of aquaculture insurance mainly faces four major dilemmas. “Aquaculture has a relatively weak ability to withstand various natural disasters and involves catastrophic disaster risks.” said Zhang Jun'an, deputy secretary-general of the Fujian Province Fishery Mutual Insurance Association. “In recent years there have been more and more extreme weather events. For example, in laver farming in Fuding City, there have been 2 disasters in the past 4 years, and both were catastrophic.”

Liu Jianxiong said that fishermen indeed have demand for aquaculture insurance, but insurance companies have never dared to do it, mainly because the risks of aquaculture are too great. Aquaculture is an industry with high input, high returns and high risk, and its risk is much higher than that of general agriculture.

Aquaculture is highly specialized, and determining the stock and value of cultured products as well as conducting post-loss surveys and loss assessments are relatively difficult, which also makes insurance companies dare not easily “test the waters.” “Aquaculture is in the sea, and the quantity is very hard to control, unlike rice or breeding sows, which are easy to determine; after a loss occurs, it is also very hard to determine the size of the loss.” said Li Jiansheng, associate professor of aquaculture in the College of Animal Sciences at Fujian Agriculture and Forestry University. “It is also hard to say whether the cause of the loss is a natural disaster or human factors such as excessive farming density or improper feeding.”

Another reason why aquaculture insurance is difficult to introduce is that aquaculture operators have weak insurance awareness and limited ability to pay premiums. “Fishermen have weak insurance awareness and a gambling mentality. If they have paid for four or five years and no loss has occurred, it is relatively difficult to get them to pay again.” said Wang Jianqiao, a staff member of the underwriting department of the Fujian Province Fishery Mutual Insurance Association. Aquaculture insurance carries great risk, and the insurance premium rate is also relatively high.

Wang Jianqiao said that calculated at a 5% premium rate, it means that if a full loss occurs once in 20 years, all the premiums would have to be paid out, not including operating expenses. The value of an ordinary fisherman's aquaculture operation is 200,000 to 300,000 yuan; calculated at 5%, the premium payable would be 10,000 to 20,000 yuan, which they also find too expensive.

Fiscal subsidies may “crack the problem” for aquaculture insurance

The reporter learned through interviews that introducing aquaculture insurance as soon as possible has become a consensus among all parties. Responsible officials of relevant departments and experts believe that for aquaculture insurance to be introduced and to develop sustainably, a reasonable premium rate is needed, but according to estimates, fishermen would find it hard to bear, and only with government policy support and fiscal subsidies can it develop soundly. “At present, for agricultural insurance such as rice and breeding sows, support from governments at all levels accounts for 70% to 80%. For example, for rice insurance, farmers only need to pay 2.4 yuan per mu per year.” said Zhang Jun'an. “If the government can subsidize 50% to 60% of aquaculture insurance, fishermen's economic burden would be relatively light, and it would be easier to find a balance point between fishermen and insurance companies.”

Lin Feng, director of the Agriculture Division of the Fujian Provincial Department of Finance, said that Fujian Province is a major aquaculture province, and to protect fishermen's interests, it is very necessary to introduce aquaculture insurance. He suggested that finance departments at all levels jointly contribute funds to provide premium subsidies.

It is understood that countries such as South Korea and Japan all have relatively mature aquaculture insurance. Relevant persons suggested that China can first carry out pilot projects within a certain scope, moving from easy to difficult and using points to drive broader progress, selecting areas where risks are relatively easy to control, aquaculture is relatively mature, relatively standardized and relatively concentrated.

Relevant persons believe that in addition to providing insurance subsidies, the government should also establish a catastrophic disaster relief mechanism and set up a “catastrophic risk reserve fund.” When a small disaster occurs, the insurance company can fully cover the compensation; when a catastrophic disaster occurs, in addition to compensation by the insurance company, government disaster relief is also needed.