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Aquaculture Insurance Claims and Loss Adjustment

The demand for insurance in the rapidly growing aquaculture industry has increased due to the emergence of medium to large-scale projects that carry significant risks. To mitigate these risks, the sector has been actively implementing risk management strategies such as Better Management Practices (BMP), certification, and traceability. However, aquaculture insurance is another effective tool that can help fish farms manage their risks. Despite its potential benefits, aquaculture insurance is a specialized insurance class that is not well-known to most fish farm operators. Many are unaware of its availability and the process involved in obtaining coverage.

Aquaculture insurance is a type of insurance that is available for fish farms and aquaculture operations worldwide, covering a wide range of species. The FAO Review of Aquaculture Insurance suggests that obtaining such insurance can provide several benefits for fish farms, including:

  • protection of invested capital,

  • safeguarding against events and natural hazards that could damage health, assets, and harvests,

  • creating more stable and secure incomes that can enhance economic welfare,

  • facilitating access to investment capital and finance,

Acquiring aquaculture insurance can offer fish farms access to risk management strategies and opportunities for mutual assistance and cooperation within the aquaculture industry.

Some things to be considered by prospective aquaculture insurance policyholders include:

  • Reading and understanding the entire policy carefully, including its terms and conditions. Reporting any changes or incidents that occur in the insured aquaculture facility.

  • Ensuring that the requirements and conditions stated in the policy or its attachments are met to obtain insurance benefits in the event of a claim.

  • Submitting a claim with an accurate value and understanding the amount of the deductible that must be paid by the policyholder in the event of an unavoidable loss.

  • Avoiding cash flow problems by paying premiums in instalments, but must be aware of the possibility of restrictions or termination of insurance coverage if instalments are not paid on time.

There are two types of insurance for fish farming, namely "All Risks" and "Named Perils".

"All Risks" assumes that all risks are initially covered and then individual risks are gradually excluded.

While "Named Perils" is the opposite, where nothing is initially covered and then slowly developed for specific risks agreed upon by the insurance company.

There is also a new type of insurance called "index coverage", which is relatively cheaper and protects policyholders from precisely measurable natural forces such as excessive or insufficient rainfall, too-high or too-low water temperatures, strong winds, high waves, and so on. A company's best type of insurance is determined based on its individual needs.

In cases of damage or loss covered by insurance, it is not enough to make a claim and hopes for payment. Insurance companies conduct thorough examinations to determine whether the problem occurred suddenly, was truly beyond the control of the policy owner, and whether the fish farmer has taken the necessary precautions to avoid danger. If there is a problem with the fish stock, it is recommended to contact the insurance company and follow their instructions immediately. Every detail, every step taken, and every event should be accurately recorded in this situation because the amount of compensation paid by the insurance company, in the end, may depend on it. After receiving a claim notification, the insurance company usually appoints a claims assessor to review and evaluate the claim based on insurance conditions. Claims assessors are usually professionally independent but paid for the task by the insurance company, so their report is also submitted there.


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