Aquaculture insurance

Aquaculture insurance covers the live biomass on a farm, the fish or shellfish being grown out, and often the pens, nets, moorings and feed barges that hold them. The reference case is Chilean. In February and March 2016, a toxic algal bloom in southern Chile killed on the order of 25 million salmon, around 15% of national output. Listed producers reported more than 100 million dollars of losses in two months. Several sites carried named-peril cover for algal blooms, with per-pen deductibles that left a heavy share on the farmer, and at least one denied claim ended up before the Chilean Supreme Court. The policy is priced on declared biomass, often monthly, valued at accumulated production cost or at a capped market value. The deductible is stated as a percentage of the stock per unit (pen or tank), on the order of 10 to 25%, to screen out the routine mortality that comes with the business. Named perils run from storms to oxygen depletion, by way of jellyfish, predators and pollution. Disease is the hard point: covered on a limited basis, with exclusions for endemic conditions and sea lice, and conditional on health plans. The underwriter looks at the density of sites in a single fjord or bay, because a bloom or a storm does not spare the neighbors. The market is small and specialized, with Norway, Scotland and Chile as the main hubs.