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Independent hatcheries can often get the same coverage as the largest fish farming companies according to executives at Aquaculture Insurance Exchange (AIE) and France-based AquaSecure.
Both companies represent a growing number of niche and traditional insurance firms targeting the aquaculture industry over the last decade, with interest sparked by the current and future growth of the finfish and shellfish farming sectors.
"Our specific insurance policy AquaSecure is also made to cover fish hatcheries," says Cédric Audor, an AquaSecure insurance broker. "And I can confirm there is no problem for us to cover a hatchery business as if it's not part of a farm."
Climactic events, disease, water quality, mechanical breakdowns, algae blooms, and broodstock health and sustainability are just some of the risk management parameters brokers assess in developing policies for finfish and shellfish hatchery businesses.
At the Aquaculture Insurance Exchange finfish and shellfish hatcheries are catered to based on their needs and risk assessments.
"The insurance can be very flexible, from all-risk protection to just hatchery business owners naming one specific peril, like fungus. There are a lot of options and it's up to the owners to pick and choose based on their situations," notes Aquaculture Insurance Exchange (AIE) aquaculture specialist Megan Sorby.
Part of a bigger picture
Both AquaSecure and Aquaculture Insurance Exchange are divisions of larger insurance brokerages that have been in the business of providing personal and commercial insurance services for years.
The companies launched their aquaculture-specific divisions within the last several years as part of their diversification model based on the strong growth of the aquaculture industry over the past decade.
AquaSecure was founded in 2008 by the traditional marine and fisheries insurance company Guian SA in France with the hiring of Cédric Audor, a longtime aquaculture specialist with over 15 years in the industry, working for the Ministry of Agriculture, managing the Aquaculture Research and Development Department.
Audor said a typical example of an AquaSecure hatchery specific client is the French sea bass hatchery SeaStream (Previously covered in the January/February 2012 issue of Hatchery International). The sea bass fingerling producer employs 25 people and produces 16 million fingerlings annually, earning the company 2 to 3 million Euros a year.
Insurance for smaller companies
Sorby, of AIE, says her company sees opportunities in the smaller operations. In the current aquaculture insurance environment insurers are developing less costly insurance packages for aquaculture start-ups and small businesses.
"Insurers were used to writing for bigger companies," she said. "It’s been more difficult to get coverage for smaller and new species operations."
That's where her expertise as an aquaculture specialist with years in the industry comes in.
"They wanted someone to be available who has aquaculture experience," she said. "Someone who knew the right questions to ask. Do they have back-up oxygen, and pumps, etc. They needed someone who could pick up on the little things. We get a lot of inquiries from farms in North America and Europe." AIE has aquaculture insurance partners in the UK.
The insurance can be very flexible, she added. We can cover everything from all risks to just an individual named peril.
Also national and local protocols for insurance come into play wherever the hatchery is sited.
"It's geared more to hatchery best management practices as dictated by state or federal guidelines," Sorby explained. "We look for businesses to be held to the highest standards and practices regulated by authorities. The sustainability factor can also show that the business is living up to best practices which helps us estimate risks and evaluate the clients insurability."
— Erich Luening
Addendum - Hatchery risks
The risk assessment of any business breaks down to a few general questions: What can go wrong? How likely is it to go wrong? What would be the consequences of it going wrong? And what can be done to reduce either the likelihood or the consequences of it going wrong?
Of course, with finfish or shellfish hatcheries there are all sorts of risks involved, such as pathogens; aquatic organisms that may be introduced or transferred; or a chemical, heavy metal, or biological contaminant.
Those are just a few of the risks involved. And when taking into account all of the potential risks to a facility – i.e. systems failure owing to power loss – one can see why having insurance to back up the business of rearing fish from broodstock to fingerlings or shellfish spawn to seed is essential protection for any hatchery business, big or small.