Fishing Safety

Insurance

Photo credit: © Yugraj Yadava, BOBP-IGO

Insurance plays an important role in fishing safety, as it provides financial compensation for the loss or damage caused by events beyond the control of the insured.

Insurance provides many benefits to the fisheries sector, including:

The FAO Code of Conduct for Responsible Fisheries recognizes the importance of insurance in fisheries. Its article 8.2.8 emphasizes that “Flag States should promote access to insurance coverage by owners and charterers of fishing vessels. Owners or charterers of fishing vessels should carry sufficient insurance cover to protect the crew of such vessels and their interests, to indemnify third parties against loss or damage and to protect their own interests”.

Nevertheless, worldwide the percentage of fishing vessels and fishers covered by insurance services is low. The 2009 FAO Review of the current state of world capture fisheries insurance estimated that some 500 000 fishing vessels were covered by marine hull insurance in 2007. Considering that the global fishing fleet consists of around 4.5 million vessels, it can be concluded that there are large gaps in insurance coverage. In Europe, Oceania and Japan, all types and sizes of fishing vessels can be insured. However, in many countries in Asia and Africa, adequate insurance services are not available or not provided at affordable premiums to fishers.

The main reasons why most small-scale fishers and their vessels are presently not insured are:

  • Low awareness of insurance advantages.
  • Lack of insurance providers active in the fishing communities.
  • Currently available insurance premiums are regarded too high.
  • Insurance policies and claim settlement processes are neither understood nor trusted.
  • The income from fisheries varies, because of seasonality of fishing, and insurance premium payments are not flexible.

The interest of insurers in providing their services to small-scale fishers is often low because of:

  • Limited knowledge of fishing operations and the needs of fishers.
  • Limited knowledge of demand for insurance by fishers.
  • Low profitability of fishing vessel insurance (high transaction costs + small premiums + high monitoring costs).
  • Lack of insurance mandates for fishing vessels.
  • Few well-functioning fisherfolk cooperatives that can act as insurance agents.

Insurers, governments, investors and fishers themselves all have a part to play in creating an environment which favours fishing safety through increasing access to insurance services.

The delivery of insurance services to fishers can be facilitated through:

  • Policy and legislation – e.g. by making insurance mandatory for vessel registration and for authorizations to fish;
  • Meeting information needs and enhancing understanding and awareness of insurance as a safety net;
  • Testing, piloting and promoting innovative products, such as parametric insurance, establishment of insurance facilities, risk funds and modern mutual insurance schemes; and
  • Leveraging technology (e.g. mobile phones) to facilitate insurance premium payments, recording of damage and losses, and making claims.

FAO promotes the development of adequate insurance services in fisheries, through awareness raising and capacity building, as well as through carrying out demand assessments among fishers and supporting the preparation of insurance programmes at national level.

In 2020 FAO initiated the Global Network for capacity building to increase access of small-scale fisheries to financial services (CAFI SSF Network), which is a result of ongoing collaboration with the Asia-Pacific Rural and Agricultural Credit Association (APRACA). The CAFI SSF Network is linked with the FAO Rural Finance and Investment Learning Centre (RFILC). The Network provides a platform that catalyzes the involvement of key private sector stakeholders (e.g. rural banks, agricultural credit associations, fishing companies, fishers’ organizations, financial and fisheries experts) to share experiences and knowledge, and to promote capacity building to increase fishers’ access to financial and insurance services.

For additional information on FAO’s activities in supporting fisheries insurance, please contact [email protected].