The economics of aquaculture insurance: An overview of the U.S. pilot insurance program for cultivated clams

Abstract

One important issue affecting the continued growth and success of the aquaculture industry is risk management. Aquaculture producers face a number of production risks (e.g., weather, disease) that substantially affect their output quantity and quality. Crop insurance is one important potential mechanism for managing these risks, but aquaculture has historically had limited insurance availability in the United States, in part because of unique challenges associated with implementing crop insurance programs in aquatic settings. The Cultivated Clam Pilot Insurance Program, which began in 2000 in four Atlantic Coast states, is the first United States, federal crop insurance program for aquaculture. This program experienced relatively high loss ratios in the early years of the program, but substantial modifications beginning with the 2004 crop year resulted in a significant improvement in actuarial performance. Experiences with clam insurance can provide insight into the potential development and application of insurance programs for other aquaculture products.