Authors| Qiu Jian, Senior Researcher, Research Institute, China United Insurance Group Co., Ltd., Postdoctoral Fellow, Institute of Finance, Chinese Academy of Social Sciences, Guo Jinlong, Researcher, Chinese Academy of Social Sciences, Director of Insurance and Economic Development Research Center, Jian Yijing, Commissioner of Rural Revitalization Department, Hunan Yueyang Branch, China United Property & Casualty Insurance Co., Ltd.
China Insurance, Issue 4, 2024
The Central Financial Work Conference pointed out that the construction of a financial power emphasized the economic "shock absorber" and social "stabilizer" functions of the insurance industry, and strengthened high-quality financial and insurance services. The "Opinions of the Central Committee of the Communist Party of China and the State Council on Comprehensively Promoting the Key Work of Rural Revitalization in 2023" was officially released in February 2023, requiring "encouraging the development of fishery insurance", which is the first time in 7 years, and it was mentioned separately in the 20th Central Document No. 1 to guide the work of "three rural", which is of great significance for preventing and controlling the risks of the fishery industry and ensuring the safe, stable and rapid development of the modern fishery industry. At the same time, led by the China Fishery Mutual Aid Association, together with the relevant provincial (municipal) fishery mutual insurance associations, fishery service cooperatives, fishery enterprises and fishery personnel, in Beijing initiated the establishment of a national fishery mutual insurance institution with independent legal personality - China Fishery Mutual Insurance Cooperative, marking the initial establishment of the mainland fishery risk protection system, the development of the mainland fishery industry is entering a new stage. Based on the current industrial development of the fishery industry and the experience of fishery insurance development in Japan, this paper puts forward some suggestions for the development of fishery insurance.
The development status of the fishery industry in mainland China
Fisheries, also known as aquaculture, are the material production sectors that encompass the cultivation of fish, other aquatic animals and aquatic plants, as well as the harvesting of aquatic products. Fisheries can be divided into freshwater aquaculture, freshwater fishing, mariculture and marine fishing according to the water area and production characteristics. The mainland is the world's largest aquaculture country, and the output of aquatic products has ranked first in the world for more than 30 consecutive years. According to the State of World Fisheries and Aquaculture 2022 published by the Food and Agriculture Organization of the United Nations (FAO), the global aquaculture industry developed rapidly in 2020, with a total of 214 million tonnes of fisheries and aquaculture, of which Asian countries accounted for 70% of the global total, while the continent provided 35% of the total production.
According to the 2022 National Fishery Economic Statistical Bulletin released by the Ministry of Agriculture and Rural Affairs in July 2023, the aquaculture area in mainland China was 7,107.50 thousand hectares, up 1.40 percent year-on-year, and the marine aquaculture area was 2,074.42 thousand hectares, up 2.41 percent year-on-year. In the face of the complex and changeable economic development environment at home and abroad, the mainland's fishery economy will continue to recover in 2022, and the output of aquatic products will grow steadily, with a total annual output of 68.6591 million tons (Figure 1), a year-on-year increase of 2.62%, and a total output value of 1,526.749 billion yuan. There were 511046 fishing vessels in total, the fishery population was 16,194,500, a decrease of 147,900 or 0.90 percent over the previous year, and the income of fishermen continued to grow, with the per capita net income of fishermen nationwide reaching 24,614.41 yuan, an increase of 1,172.28 yuan or 5 percent over the previous year.
Overview of the development of fishery insurance in mainland China
There are many kinds of aquatic products in the mainland, the production methods are rich and diverse, but the degree of scale is not high, mainly a large number of small-scale individual farmers, the fishery production and operation environment is complex, greatly affected by the marine environment and natural factors, coupled with the abnormal climate changes, major disasters and weather occur frequently, it is a high-risk industry in the large agricultural industry, and the ability to resist risks is weak. China's fishery statistics from 2016 to 2022 show that the average annual direct economic loss caused by disasters in mainland fisheries is about 16.513 billion yuan, and in 2022, affected by typhoons, floods, diseases, droughts, etc., the affected area of fishery aquaculture is 435.31 thousand hectares, with a total direct economic loss of 9.793 billion yuan, of which the loss of aquatic product output is 767,800 tons, and the economic loss is 9.209 billion yuan (Figure 2), especially the loss of drought disaster is 2.921 billion yuan, accounting for 31.72% , the disaster losses caused by typhoons and floods reached 2.422 billion yuan, accounting for 26.30%.
In 2007, the central government's policy of subsidizing agricultural insurance premiums was launched, which to a certain extent promoted the rapid development of fishery insurance business, and the scale of fishery insurance premiums increased from 325 million yuan in 2016 to more than 40 billion yuan in 2022, and the proportion of total agricultural insurance premiums also increased year by year, from 0.78% in 2016 to 3.00% in 2022 (see Table 1). Fishery insurance in mainland China is mainly divided into fishing vessel insurance and fishery loss insurance, of which fishing vessel insurance not only includes the ordinary damage insurance of the fishing vessel itself, but also covers cargo transportation insurance, shipowner liability insurance, personal accident disability insurance and other insurance, while fishery loss insurance includes fish catch insurance, aquaculture insurance, fishery facilities insurance, etc.
In order to effectively protect fishery aquaculture production and improve the ability of fishermen to prevent disasters and losses, the agriculture and fishery departments set up the China Fishing Vessel Owners Mutual Insurance Association in the 90s of the 20th century, which was renamed the China Fishery Mutual Insurance Association in July 2007, and opened to provide mutual aid insurance services including fishing vessel property, fishermen's personal accident injuries and aquaculture fishing, which were organized and implemented by the government and the China Fishery Mutual Insurance Association, and some local finances gave certain premium subsidies. With the development of the fishery industry and the continuous strengthening of fishery risk management, mutual insurance organizations are gradually transformed, and professional mutual insurance organizations must be established to meet the requirements of laws, regulations and policies. The formal establishment of China Fishery Mutual Insurance Co., Ltd. is a milestone step in the high-quality development of fishery insurance.
At present, the mainland fishery insurance is mainly based on the mechanism of "policy insurance + mutual insurance + commercial insurance", and the fishery mutual insurance system will provide risk protection for nearly 600,000 fishermen and 55,000 fishing vessels in 2022, with a premium income of about 2.4 billion yuan and insurance protection of more than 6,000 billion yuan. In aquaculture, the premium income is about 220 million yuan, a total of 1.6 million acres of aquaculture water surface provides about 4 billion yuan of risk protection, the customers who have purchased aquaculture insurance account for about 10% of the total scale of the national aquaculture industry, and about 80% of the large and medium-sized fishing vessels in the mainland are insured, and more than 70% of the marine fishing professionals are insured.
Commercial insurance companies are gradually paying attention to fishery insurance. In 2022, 29 provinces, municipalities and autonomous regions across the country have launched aquaculture insurance business, with a total premium income of 3.824 billion yuan (Figure 3) and more than 60 billion yuan of risk protection. The business scope of fishery insurance is mainly concentrated in Guangdong, Jiangsu, Zhejiang, Anhui, Hubei, Jiangxi, Sichuan, Hunan, Tianjin, Shanghai ten pilot provinces and cities, the premium accounted for 92% of the national fishery premium, a year-on-year increase of 97%. Judging from the fishery insurance products that have been developed and reported, the types cover more than 10 varieties such as fish, shrimp and crabs, and the number of insurance types is about 700. From the perspective of business scale and the number of product insurance, the current freshwater aquaculture insurance is much higher than that of marine aquaculture insurance, and its premium accounts for more than 80% of the fishery insurance business. From the perspective of market operators, the insurance companies that provide fishery insurance are mainly PICC Property Insurance, China Property Insurance, CPIC Property Insurance, Ping An Property Insurance, China Life Property Insurance, Guoyuan Agriculture and other companies. The reasons for the insufficient development of fishery insurance are: first, the risk perception and insurance awareness of fishermen and farmers are not strong, and the publicity of fishery insurance is not enough; second, the real data of fishery insurance underwriting claims are difficult to grasp, the investment in science and technology is large, the talent reserve is less, the fishery risk management and control is difficult, the frequency of danger is high, the loss of each disaster is large, and the loss repair is poor, and the willingness of insurance companies to actively participate in underwriting is not strong; third, the insurance products developed by commercial fishery insurance are less, and the types of government subsidies are few, and they are far from meeting the market demand.
Experience in the development of fishery insurance in Japan
Japan is one of the countries in the world with a developed fishing industry, with diverse species and abundant resources, and the development of fishery insurance has a history of nearly 100 years, and has formed two systems of fishing vessel insurance and fishery loss insurance. The operation mode of fishing boat insurance in Japan is mainly guaranteed by a multi-level system of fishing boat insurance mutual aid organizations, including fishermen's cooperatives, fishing boat insurance associations at all levels, and fishing boat insurance associations, and the implementation of a compulsory participation system, that is, if more than two-thirds of fishermen in the same area agree to participate in insurance, all fishing vessels in the area must be insured.
For fishery loss insurance, the Japanese government implements a differentiated premium subsidy system, which in principle favors small-scale fishermen, that is, the smaller the scale, the greater the subsidy. The difference is that only fishermen in the same area agree to participate in fishery insurance can receive the corresponding subsidies, which are divided according to the type of insurance: catch insurance is subsidized according to tonnage, ranging from 35% to 60%, while fish farming insurance is based on the number of breeding ponds, shellfish farming insurance is based on the number of rafts, and fishing net facilities insurance is based on the number of breeding ponds, depending on the number of subsidies, ranging from 25% to 50%. In addition, Japan has also established a reinsurance system, the disaster loss in the provincial fishery mutual aid organization, the national federation of fishery mutual aid associations and the government between the division of responsibility ratio, the larger the scale of the loss, the lower the proportion of the provincial fishery mutual aid organization, but the provincial proportion of the range of 5%-30%, once the loss exceeds the pre-agreed threshold, the provincial fishery mutual aid organization will no longer bear the insurance liability, will be borne by the national federation of fishery mutual aid organizations all its losses, and the excess part by the government to bear the catastrophe loss.
Problems and development suggestions for fishery insurance in mainland China at this stage
At this stage, the development of fishery insurance in the mainland must overcome difficulties. For example, in 2022, the scale of agricultural insurance premiums in mainland China will exceed 100 billion yuan for the first time, reaching 119.2 billion yuan, and the premium income of fishery insurance will reach 3.824 billion yuan, and the depth of agricultural insurance will reach 1.35%, while the depth of fishery insurance will be about 0.04%, accounting for only 3% of the depth of agricultural insurance Left and right, compared with the fishery output value accounts for nearly one-tenth of the total output value of agriculture, forestry, animal husbandry and fishery, the coverage of fishery insurance is low and extremely uncoordinated with the scale of industrial development; the degree of regional development is uneven, the support at the policy level is insufficient, and the financial policy support is not in place; the accumulation of risk data is small, the pricing of innovative insurance types is difficult, the effective supply of insurance products is insufficient, and it is difficult to underwrite the standard inspection and survey and damage assessment; the unit risk is large, the moral hazard is high, and the business loss ratio is high; the insurance company pays insufficient attention, the understanding of fishery risk is insufficient, and the use of high technology for risk management and control is not strong; and there are few insurance professional and technical personnelThe role of insurance risk protection and financing credit enhancement is not fully played.
General Secretary Xi Jinping pointed out that "to the rivers, lakes and seas to food, stable aquaculture", the establishment and development of modern "water granary" is inseparable from the strong guarantee of fishery insurance, in the face of the effective supply of fishery insurance is insufficient, combined with the development experience of foreign fishery insurance, try to put forward the following suggestions.
1. Adhere to the people's and political advantages of fishery insurance
The basic business model of policy-based agricultural insurance in mainland China is mainly to entrust the business to commercial insurance companies, and the government gives certain subsidies, and insurance companies help the government design risk assessment models and claim mechanisms, manage risk funds, and provide management resources, which is more scientific than direct subsidies to farmers. With the support of the national finance for subsidies to insured entities, the central government will issue a total of 47.766 billion yuan in subsidies for agricultural insurance premiums in 2023, which has greatly reduced the burden on insured entities and increased the enthusiasm of rural households to participate in insurance. According to Article 17 of the Articles of Association of China Fishery Mutual Insurance Association, the mutual insurance rate of fishery and aquaculture organisms is 15%, and fishermen need to invest more insurance costs than other aquaculture industries.
Strengthen the party's leadership, government support, financial support, farmer participation, for the agricultural insurance system is the Chinese characteristics of agricultural insurance, fishery insurance should adhere to the characteristics and advantages of this system, and gradually establish and improve the "policy insurance + mutual insurance + commercial insurance" mechanism, the future can gradually strip the mutual aid association insurance business, the establishment of professional insurance institutions to undertake the reform ideas, to promote the fishery mutual insurance to further professional, market-oriented transformation.
2. Strengthen the research on risk management and control of fishery insurance
Fishing is one of the most complex industries in agriculture, with a wide variety of types and risks. In the event of a disaster, traditional fishermen use their own funds first, and insurance is usually the last option. On the one hand, fishermen's awareness of insurance is weak, and on the other hand, fishery insurance has a high professional and technical threshold, and product design, rate pricing, and claim settlement standards are all facing great challenges. Aquaculture target in the water, the growth process and survival state is difficult to grasp, different aquatic products in different breeding modes of biological characteristics, feeding management, risk management and control have significant differences, coupled with information asymmetry, internal system is not strict and other problems, fraud and insurance fraud occur from time to time. The insurance industry should not only improve its own insurance professional knowledge and service skills learning ability, understand the advanced technology of fishery, such as sonar number fishing, fish face recognition and other technical applications, strengthen the training of fishery insurance personnel, etc., but also increase the risk research of fishery production, fishing, transportation and processing, increase the research on fishery losses caused by natural disasters, epidemics and pollution, strengthen the risk management and control research of fishery insurance, and improve the overall service capacity of fishery insurance.
3. Optimize the policy support mechanism for premium subsidies
From the perspective of development experience, fishery insurance is difficult to operate, mainly because it is not included in the scope of agricultural insurance premium subsidies of the central government, local financial support is limited, and farmers' enthusiasm for insurance is not strong. At present, fishery insurance is only listed as local specialty agricultural product insurance in some provinces and cities with abundant aquaculture resources, and the insurance rate of provinces with local government subsidies is very different from those without local government subsidies. In addition, for subsidized cities, the subsidy method and proportion are not differentiated according to the type of insurance and the scope of protection. It is also an important part of supporting the overall development of the "big agriculture and big food" development of fishery loss insurance, which can effectively mobilize the enthusiasm of fishermen to participate in insurance.
4. Establish and improve mechanisms for diversifying disaster risks
The fishing industry will face natural disasters such as droughts, storm surges, and typhoons for a long time, and the high risk and high loss ratio make insurance companies hesitate. In particular, the deep-sea fishery in the open sea is mainly operated by modern cages and aquaculture vessels, and the impact of the disaster is immeasurable. In order to effectively improve the ability of agricultural insurance to avoid and share risks, it is necessary to establish and improve the three-level insurance system of fishery insurance, fishery reinsurance and fishery catastrophe insurance, and fully disperse the risks of fishery insurance in the insurance market. For example, the Japanese government takes on the last risk of excess reinsurance and issues catastrophe bonds to hedge against the economic impact of disaster damage.
5. Strengthen the technology research and development and application of fishery insurance
In line with the core service connotation of "protection, prevention, rescue and compensation" of agricultural insurance, the establishment of a risk defense mechanism in the aquaculture industry should be strengthened to deal with the problems of a wide variety of fishery insurance subjects, strong breeding technology, difficulty in determining insurance product rates, difficult to assess losses and difficult actual operation of claims, that is, to explore the collection, mining and application of big data in the field of fishery, upload the collected data to the cloud platform, and share the aquaculture environment with fishermen in real time, including water temperature, dissolved oxygen, pH index, etc. For example, in 2022, China Property & Casualty took the lead in developing and launching the "Insurance Cloud Fish Pond" service system in the industry, providing fishermen with basic risk management tools through the integrated service of "insurance protection + scientific and technological disaster prevention + production big database + agricultural product quality and safety traceability + government industrial supervision".
6. Innovate and develop insurance types that adapt to the modern fishery industry
At present, the mainland fishery has basically formed a diversified and multi-level aquaculture and its processing industry structure, such as land surface aquaculture, offshore aquaculture, deep-sea aquaculture, deep-sea capture fishery and paddy rice, fishing, shrimp and crab continuous cropping or co-cropping aquaculture, etc., according to the industrial structure and breeding methods, different types of fishery insurance can be developed, such as for inland and offshore fisheries, the design of fishery facilities, equipment, and personnel disaster loss insurance; For the paddy field aquaculture industry, design cost, income or price index insurance, meteorological index insurance, "insurance + futures" model, etc., and give full play to the positive role of multi-level capital and insurance protection in the construction of a modern aquaculture industry chain system.
7. Strengthen the compliance operation of fishery insurance business
Earlier, fishery insurance was mainly operated by mutual aid associations, supervised by the civil affairs department, since the establishment of China Fishery Mutual Insurance Cooperative, which has an independent legal personality, fishery insurance business activities must be strictly in accordance with the relevant provisions of the "Insurance Law", "Agricultural Insurance Regulations", and "Trial Measures for the Supervision of Mutual Insurance Organizations" (2015 Edition). From the perspective of regulatory methods, the mainland has yet to introduce the "Agricultural Insurance Law", "Fishery Insurance Law", "Fishery Insurance Implementation Rules" and other laws and regulations to regulate the behavior of fishery insurance operators, including the access qualifications of market entities, the delineation of responsibilities of the competent authorities, the management system of reinsurance and catastrophe risks, the management of premium subsidies, penalties and other regulatory content, to build a complete, scientific and standardized, effective operation of the institutional system, to effectively restrain the compliance of fishery insurance business entities, to avoid business risks and financial risks. At the same time, the insurance supervision of the State Administration of Financial Supervision will be strengthened to ensure the high-quality development of the fishery insurance market.