The Development Study Of Aquaculture Insurance

Since 2007, China has become the largest producer of seafood in the world, especially the annual production accounts for approximately 35% of world seafood production in 2009. As Gerry Trier Nordic Bank Financial Group's 2007 report on China's seafood industry pointed out:The per capita consumption of the seafood will grow 40% in the next 10 years, growing from per capita consumption of 26 kg in 2005 to per capita consumption of 36 kg in 2015. however, with a substantial growth of the Chinese seafood production and export, the wild-caught tends to zero or negative growth in China, for example, the wild-caught in the East Sea showed a declining trend in 2001. Therefore, as an inevitable choice for Chinese fishing industry, developing aquaculture can not only increase the fishermen's income but also improve the living standards of fishermen. At present, on the world, China is the only country whose aquaculture production surpasses the amount of fishing. Moreover, it is a country with frequent natural disasters, the fishermen with fragile anti-disaster capacity shall suffer a heavy loss of fishing once they encountered a heavy risk, which is difficult for them to reproduce next year, generating many adverse effects on ensuring China's food security and maintaining social stability. Therefore, promoting the aquaculture industry the insurance is a necessary measure to keep the health of sustainable development of marine aquaculture.First, from such aspects as the characteristics of China's aquaculture, North-South differences of farmed species and various risks led by breeding varieties of seafood, this paper analyzed the developing trend of the marine aquaculture industry in detail, pointed out the current outstanding problems faced by the aquaculture and offered some solutions to these problems. Finally, through both theoretical and empirical analysis, this paper analyzed the vast potential of the developing marine aquaculture in China and further elaborated the necessity and urgency in carrying out the aquaculture insurance in China.Secondly, this paper introduced the definition and characteristics of aquaculture insurance as well as the difficulties in carrying out aquaculture insurance such as moral hazards and adverse selection problems in the monitoring and assessing the damage and other serious problems in marine aquaculture insurance. In addition, it made a review of failing cases and the status quo in carrying out the aquaculture insurance in China. Considering European and American developed countries in their successful experience in aquaculture insurance, the author pointed out mutual insurance is clearly the most suitable for Chinese aquaculture insurance development. However, the role played by the government in promoting aquaculture insurance worth thinking deeply. The western developed countries and some developing countries have adopted the policies of marine aquaculture insurance for many years, their experiences suggested that:Policy support provides strong protection for the smooth development of marine aquaculture insurance, but the policy of insurance made bad performance in the efficient, equitable, financial and other aspects. Hence, it is essential to determine the role played by the government in promoting aquaculture insurance, and it also asked more of the higher work of the government. They shall not only provide some policy supports for aquaculture insurance but also should put more focus on guiding the healthy development of marine aquaculture insurance, rather than simply give the insured farmers some subsidies. They should strengthen the communication between the fishery mutual insurance organizations and the insurance brokerage firms, and make full use of professional insurance brokers and the well-known Insurance groups to make sure that reinsurance agreements shall be reached. Insurance brokerage firms can also design new financial instruments for fishery mutual insurance organizations to transfer the marine aquaculture disaster risk, accordingly provide a new way of thinking to address the marine aquaculture insurance. For example, catastrophe bonds, weather index, area yield index. At present, in the international capital market, the financial products like regional yield insurance and weather index insurance, which transfer the agricultural disaster risks, have been developed. Area yield index insurance is one which based on a pre-specified average regional output. When the average area yield crop insurance is lower than a specified level, it determines the compensation paid by the contract while index insurance is a pre-designated area with a predetermined basis of meteorological events like temperature, rainfall, and wind speed. it determines the compensation paid by the contract. Given the complexity of marine aquaculture, compared to general regional output, the weather index insurance provides less information. Hence, this paper tentatively introduced regional production insurance into the marine aquaculture insurance.Finally, the detailed introduction to the regional production insurance was given and the risk zoning was tried by this paper. For Crustacean aquaculture for seafood, it carried out cluster analysis of provinces and cities across the country and obtained good results, and we also estimated their ratings.