Swiss Re introduces first parametric aquaculture insurance solution in Taiwan to protect 120,000 hectares of grouper fish ponds from extreme rainfall in Ping Tung
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- The parametric insurance will cover grouper onshore fisheries in Ping Tung Country against extreme rainfall of over 480 mm for two consecutive days.
- This innovative insurance solution, the first in Taiwan, uses meteorological data to allow faster payout, reducing the time that is needed to settle claims and reducing the ambiguity of quantifying loss incurred for the fish farmers.
- The aquaculture insurance solution will protect 120,000 hectares of grouper fish ponds that produce 25 million kg of groupers annually, making the fisheries sector in Taiwan more resilient.
Swiss Re, together with Taiwan Fire & Marine Insurance, has jointly developed the first parametric aquaculture insurance solution in Taiwan. This insurance solution is launched in the Ping Tung County to help onshore fish farms transfer heavy rainfall risk through an insurance that is paid out when the County experiences extreme rainfall of over 480 mm for two consecutive days. It will protect grouper fish producers from flash flood, which may cause overflowing of onshore fisheries and escape of the fishes, resulting in a loss of fish stock.
Grouper is one of the expensive fish breeds in the Ping Tung County and a high economic asset in the aquaculture industry in Taiwan. The insurance scheme will eventually cover 120,000 hectares of grouper fish farms, generating a production of 25 million kg of fishes in Taiwan annually for local consumption and export to Asian markets.
"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," says David Alexander, Head of Property & Casualty for Hong Kong and Taiwan of Swiss Re.
"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," adds Harini Kannan, Head of Agriculture Reinsurance in Asia (ex-China) of Swiss Re.
Back in Summer 2009, Taiwan experienced a series of typhoon which carried significant rain to the southern part of the country. The fisheries in Ping Tung County suffered significantly as the fish ponds were overflown with rainwater and nearly 50 percent of the fisheries sector was wiped out. This resulted in an estimated loss of TWD 1.7 billion (USD 56 million).
With the overarching initiative from the government in transferring agricultural risk to the insurance sector, there are repeated calls from the on-shore fish farm sector for an insurance solution. The insurance has now attracted overwhelmed popularity and public demand by the fish farmers in the first week of its launch.
This is the second insurance solution launched in Taiwan by Swiss Re for the agricultural sector, in response to Taiwan Government's initiative in developing insurance solutions for farmers and fisheries. The first being the indemnity insurance for pears launched in 2015 for the farmers in Taiwan.