Insurance in the fisheries sector in India, unlike

that of crop and livestock, does not have a long

history or an organized structure to boast of. Except

for the presence of a few public sector insurance

companies and cooperative bodies at the local level

with limited scale of activity, the sector has received

little attention either at the central or state levels.

The private sector operation in this arena is also

limited to a few cases scattered over time and

space. Among the available options, the ‘Group

Accident Insurance Scheme for Active Fishermen’

is the only major programme presently in operation

that covers the life/disability risks of the boat crew

Gopalakrishnan, A

Koya, Mohammed

Narayanakumar, R

Ramachandran, C

Salini, K P

Shinoj, P

Sunil, P V

CMFRI Digital Repository

Mar. Fish. Infor. Serv., T & E Ser., No. 233, 2017 3Marine Fisheries Insurance in India: Status and prospects*Shinoj Parappurathu, C. Ramachandran, A. Gopalakrishnan, K. Mohammed Koya,R. Narayanakumar, K. P. Salini and P. V. SunilICAR-Central Marine Fisheries Research Institute, Kochi*email: pshinoj@gmail.comTechnological advancements in the realms ofvessel propulsion, gear design, navigation-systemas well as information-communication have resultedin intensification of investments and therebydeepening of economic risks associated with marinefishery operations. The risks in capture fisheriesinclude a variety of factors such as loss or damageto fishing vessels, equipment and gear in operation,loss of catch and human casualties in the sea.Though such risks and dangers are inherent withmarine fishing operations, their economicimplications are manifold in recent times,particularly for the small-scale fishers and boatowners. The risks associated with fish culture inmarine environment (mariculture) is also equallyimportant in the wake of disease incidences, climatechange and consequent weather factors, harmfulalgal blooms (HAB) and other natural calamities.Despite the above state of affairs, institutionalmechanisms to address risk and uncertainties in themarine fisheries/ mariculture sectors have beengrossly inadequate in India. Insurance is one of thewidely adopted means for risk management and isused the world over as an effective instrument forcontaining and mitigating a wide variety of riskssuch as asset risks, production and managementrisks, market risks, personal and health risks.Insurance in fisheries is by far under-utilizedcompared with other sub-sectors of agriculture inthe country, barring a few local exceptions, andtherefore unavailable for the majority of thestakeholders in this sector. This is notwithstandingthe growing demand for risk management solutionsfrom the fishing community across the country.Present status of marine fisheries /maricultureinsuranceInsurance in the fisheries sector in India, unlikethat of crop and livestock, does not have a longhistory or an organized structure to boast of. Exceptfor the presence of a few public sector insurancecompanies and cooperative bodies at the local levelwith limited scale of activity, the sector has receivedlittle attention either at the central or state levels.The private sector operation in this arena is alsolimited to a few cases scattered over time andspace. Among the available options, the ‘GroupAccident Insurance Scheme for Active Fishermen’is the only major programme presently in operationthat covers the life/disability risks of the boat crew.Under this, the insured fishermen (reserved for agegroup of 18-70 years) get a claim of ` 2 lakhs incase of permanent disability/accidental death, and` 1 lakh in case of partially disability. The premiumis fully subsidised and borne by the centralgovernment and state governments on 50:50 basis.An additional 300 thousand fishermen were targetedto be covered under this scheme during the 12thplan (2012-2017). A similar scheme in operationunder the patronage of Matsyafed in Kerala providesa compensation of ` 5 lakhs to the dependents offishermen who die in accidents. It also covers partialdisability and hospital expenditure of injuredfishermen with payments varying from case to case.Vessel/ gear (fishing net) insurance is another majorrisk management tool to secure the livelihoods offishermen against the risks in the seas. Theconditions for vessel insurance vary significantlydepending on the type of vessels, area of operationMar. Fish. Infor. Serv., T & E Ser., No. 233, 20174and companies involved. However, the annualpremium generally ranges between 3-5 per cent ofthe value of vessels and even higher at times.Compensation is generally paid only in case ofcomplete damage of vessels. They are mostlyextended by the subsidiaries of GIC (New IndiaAssurance Company Ltd., Oriental InsuranceCompany Ltd. and United India Insurance CompanyLtd.) and a majority of the active policies are credit-linked. Vessel insurance is also offered by Matsyafedfor member fishermen on vessels purchased undertheir subsidised loan scheme. A similar subsidisedvessel insurance scheme is being offered by thegovernment of Tamil Nadu for vessels operating fromvarious harbors within the state. Apart from these,boat owners’ associations based at certain harbours(Neendakara harbour in Kollam district of Kerala,Paradeep harbour in Odisha; Mangrol harbour inJunagadh district of Gujarat) are providing specialrisk coverage against damage of vessels to memberfishermen. Insurance coverage of coastal assets(houses and other immovable property) is anotherimportant risk management measure which everyfishermen family ought to have. Unfortunately, the‘Disaster Risk Insurance Product for CoastalCommunities’ introduced in the aftermath of theTsunami of 2004 in Tamil Nadu is the only majorexperiment in this regard so far. This scheme pilotedby Bajaj Allianz with assistance from CARE India,provided micro-insurance to nearly 75,000 coastalfamilies in Tamil Nadu and proved helpful duringthe cyclone Nisha that occurred in 2008. Even thisscheme is not in operation presently, leaving thelarge part of Indian coastal households without anyeffective risk management covers. As of now, nomajor programmes/schemes exist to deal with risksand uncertainties related to mariculture operations.Level of adoptionAn assessment of the adoption of various typesof personal/group accident insurance schemesacross selected maritime states based on a primarysurvey conducted by ICAR-CMFRI in 2016 revealedthat about 80-100% of the sampled fishermen werecovered under accident insurance scheme in Kerala,a state with the highest level of adoption (Table 1).In Tamil Nadu, the coverage ranged from 16-100%across the landing centres surveyed. On the otherTable 1. Adoption of various types of fishery insurance schemes in selected maritime states of IndiaState District Per cent of sampled fishermen/ vessel crew who adopted insurance of typePersonal/group Vessel (hull) Fishing gear Coastal assetaccident insurance insurance insurance insuranceKerala Kollam 100 (45) 12 (25) 0 (25) 0 (45)Alappuzha 100 (20) 50 (10) 10 (10) 0 (20)Ernakulam 79 (38) 17 (23) 0 (23) 0 (38)Kasargod 87 (15) 0 (5) 0 (5) 0 (15)Andhra Pradesh Vizianagaram 0 (22) 0 (17) 0 (17) 0 (22)Srikakulam 0 (24) 0 (19) 0 (19) 0 (24)Vishakhapatnam 0 (14) 0 (9) 0 (9) 0 (14)Tamil Nadu Cuddalore 16 (44) 0 (29) 0 (29) 14 (44)Puducherry 100 (10) 10 (10) 0 (10) 0 (10)Villupuram 96 (50) 0 (40) 0 (40) 0 (50)Gujarat Junagadh 35* (20) 47* (15) 0 (15) 0 (20)Gir Somnath 55*# (20) 33* (15) 0 (15) 0 (15)Odisha Ganjam 0 (47) 0 (37) 0 (37) 0 (47)Jagatsinghpur 50* (20) 100* (10) 0 (10) 0 (20)Note: Figures in parentheses denote total number of respondents applicable under each category; adoption estimates pertaining tovessel and gear insurance are based on responses of vessel owners only.*Indicates risk coverage against personal accident and vessel damage provided by boat owners associations for their members;#The estimate includes personal accident insurance availed by vessel crew under government schemes.Source: Parappurathu et al., 2017 Marine Policy, 86: 144-155.Mar. Fish. Infor. Serv., T & E Ser., No. 233, 2017 5hand, none of the respondent fishermen wereinsured in Andhra Pradesh, despite it being a statewith high incidence of extreme weather events. Thestates of Gujarat and Odisha were no better withonly large landing centres well served leaving outthe majority of smaller ones.The level of adoption of vessel insurance wasalso not inspiring as per the study. Except in thecase of large landing centres in Paradeep, Odisha;Mangrol and Veraval in Gujarat, where influentialboat owners’ associations operate their owninsurance programs with the help of revolving corpusfunds collected from member fishermen, thecoverage of vessel insurance is hardly satisfactoryacross the maritime states. Insurance coverage offishing nets is even worse with most of the fishermenhaving opted out of it, irrespective of the regionthey belong to.Main challengesThere are a number of issues that explain thereasons behind low risk financing of the marinefishery sector in India. In most of the places, thefishers / mariculture farmers are either unawareor are less concerned about the need to insure theirassets against various types of risks. In certain caseslike vessel insurance in Kerala, people are wellaware of insurance, but are reluctant due to highpremiums involved, lack of provision for claimsettlement in case of partial damage, hasslesinvolved in claim settlement process, reservationsabout timely and assured settlement of claims andso on. As enrollment is lower due to the abovereasons, the insurance companies have limitedoptions to develop products that are affordable.The companies are also concerned aboutmalpractices such as intentional dumping of fishingvessels, especially old and less energy-efficientones, to secure claims. Unlike on land, themechanisms to detect such malpractices are scanty.At many places, the fishermen/fish farmers pointto lack of availability of adequate insurance optionsas one of the reasons for their non-enrollment. Thisis particularly relevant for private insurance,wherein the industry has never explored thepotential of launching suitable products for anumber of risks citing low interest of fishermen,poor demand for insurance, low profitability, highrisk involved, high moral hazard, and so on. In short,insurance in India’s fisheries sector suffers fromproblems such as lack of transparency, lowaffordability, high moral hazards and poor customeracceptance.Technology and policy perspectives for reformsThere is immense scope to reform the coastalasset and fishery insurance through concertedefforts at the Central and State levels. Strongmeasures from both government and insurancecompanies are needed to inculcate risk financingculture in the coastal areas. There is also a need toimprove the mutual reciprocities between insurancecompanies and fisher folk. Developing linkages withfishermen/fish farmer cooperatives, producerassociations, etc. would prove beneficial in thisrespect. Ensuring the participation of grass-rootlevel organizations (fishery cooperatives/NGOs/boat owner associations) as intermediaries orpartners for insurance administration besidesdeploying of a brigade of rural insurance agents/service providers  would also be helpful tostrengthen grass root level support services. Micro-insurance is a promising avenue particularly toadminister coastal asset insurance. India can learnfrom successful initiatives from other Asian andAfrican countries on this front. Bundling micro-credit with asset/disaster insurance programs is alsoa sensible option to enhance coverage of schemesin areas where self-help groups have activepresence. There is a general discontent amongfishermen/fish farmers about high insurancepremium and unavailability of custom-madeinsurance products. To address this, it is importantto bring-in flexibility in insurance schemes throughoptions such as payment of premium in instalments,partial coverage of fishing units and augmentedproducts with coverage on fishing gear. Willingnesson the part of insurance companies to compensatepartial damage of fishing vessels would certainlymake a visible dent in changing the attitude offishermen towards insurance. They may also thinkof launching new products in hitherto un-servicedMar. Fish. Infor. Serv., T & E Ser., No. 233, 20176areas like cage culture, seaweed farming and musselculture after proper assessments on profitability.The governments should strive towards developingadequate dispute settlement mechanisms to addressgrievances, besides taking measures for increasingcompetition in the sector by incentivising the entryof new players to the sector. They may also considerreallocating some of the existing unhealthy subsidiestowards incentivising greater insurance coverage.If required, the governments can introduce somedegree of legislative coercion through mandatoryinsurance coverage, wherever possible. Specialincentive packages may be extended to the islandswhich are the most vulnerable, therefore deservingdistinctive treatment.Together with reforms in governance, technologycan play a vital role in improving efficiency, bringingtransparency and reducing moral hazards in fisheryinsurance. Innovative products such as weather-index based insurance schemes are already in forcein the agriculture sector, wherein, satellite data andinputs from weather stations are being used totrigger insurance payments in case of occurrenceof weather related events. These can be extendedto capture fisheries sector as well, to increaseefficiency and simplify procedures. The inputs fromsuch platforms could be used for compensatingdamages to coastal assets of fisher folk, marinecages, and other fishery-related infrastructure.Similarly, advanced vessel Monitoring Systems (VMS),which are presently in the pipeline to be introducedin India, could be made use of to track the fishingvessels and assess incidents such as mid-seacapsizing and collisions. Such data would be valuablefor the insurance companies to verify insuranceclaims by affected beneficiaries. Further,interactive Information and CommunicationTechnology (ICT) tools and mobile applications couldbe leveraged for speedy processing of insuranceclaims as well as for real-time assessment ofdamages incurred to fishing vessels and maricultureunits in case of calamities. Promising options suchas micro insurance, which has already proved itspotential to change the lives of resource poor peoplein various parts of the world, can also contributeand should be explored further. Over and abovethese measures suggested, efforts to improve theliving standards and socio-economic conditions ofthe fishing community through developmentprograms can also help to a great extent.

Marine Fisheries Insurance in India: Status and prospects

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Marine Fisheries Insurance in India: Status and prospects

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