Insurance and risk management
STORMY outlook Extreme weather events and algal blooms are likely to mean pricier premiums for farmers BY ROBERT OUTRAM
W
hen it comes to the impact of climate change, the insurance industry is on the front line. Last month, HRH Prince Charles, who has long been a champion of the environment, brought representa�ves of the sector together for the launch of the Sustainable Market Ini�a�ve Insurance Taskforce. The Taskforce involves the heads of 17 firms, who have pledged to support the transi�on to a less carbon-intensive economy by expanding insurance coverage for climate-friendly projects and partnering with governments to provide be�er cover against climate-related disasters, which many believe are likely to occur with greater frequency as the planet heats up. For those insurers specialising in cover for aquaculture, climate-related risks also loom large. Duncan Perrin is Aquaculture Manager with Sunderland Marine, a specialist firm covering aquaculture as well as fishing and coastal vessels, which has been part of the North Group since 2014. His par�cular focus is insurance against stock mortality. He says: “Agricultural reinsurance in general has been hard hit in the past few years. We have seen wildfires in California, Australia, and South Africa, and hailstorms in US Midwest. Meanwhile the UK experienced unusual weather this spring, with the lowest average April temperatures recorded. If there’s an unusual weather event, someone somewhere is paying for it!” Perrin adds: “For aquaculture, what we are seeing more of is algal blooms and storms. These have always happened but now they seem to be more intense. Storm Gloria was an unprecedented weather event [in January 2020]. People lost their lives and there was huge disrup�on along the coast of Spain. These events are increasing in frequency and severity.” Also specialising in this sector is GAIC, the Global Aquaculture Insurance Consor�um. GAIC was set up in 2009 to insure fish and shellfish farms for stock mortality exposures that are difficult to place in the local market in most countries. The facility is administered by Lloyd’s insurance and reinsurance broker Alwen Hough Johnson Ltd, with capacity provided by certain syndicates at Lloyd’s of London. Neil Hopkins is an underwriter with GAIC and, having originally trained as a fisheries biologist, has been an aquaculture insurance specialist throughout his 37-year career. He agrees that climate-related events have led to some big claims in recent years. As he puts it: “Insurers are feeling the pain.” Hopkins notes that some risks in aquaculture have reduced compared with the past: for example, cage design and moorings are be�er engineered and there are now vaccines for some of the fish diseases that previously troubled producers. He adds, however: “Some risks have worsened. Climate change means storms and drought. There is a longer storm season and very severe storms
If there’s an unusual weather event, “someone somewhere is paying for it! ”
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Above: Catalonia, Spain with a storm coming in
are more frequent. In addi�on the frequency, severity and geographical distribu�on of algal blooms is increasing.” Insurance is known as a cyclical business, and premium rates go up and down depending on how much capacity on the part of insurers is coming into, or leaving, the market. Right now the cycle is “hardening” a�er a number of “so�”
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