Climate risk, insurance, and the future of fisheries and aquaculture
QUESTION
How can the insurance sector adapt its products and risk assessment frameworks to account for the increasing frequency and severity of climate-driven events (e.g., marine heatwaves, storms, disease outbreaks), and what innovative insurance models could support the long-term resilience of fishers and aquaculture producers?
ANSWER 1
Written response:
Financial instruments such as insurance are available to help farmers manage climate shocks such as drought. Yet, similar risk management tools are almost entirely absent from coastal communities. Ensuring resilience and adaptability of the seafood sector in the face of accelerating climate change involves risk management and risk reduction. In a world where climate patterns are rapidly evolving, innovative financial instruments have a role to play in managing environmental risks and reducing exposure to these risks through climate adaptation. There is a current working group (Australia and USA) https://oceanmodelingforum.org/working-groups/risk-management-in-fisheries/ considering options and working with industries and insurance brokers.
Parametric insurance—when a predetermined amount is paid out based on parameters chosen based on expected losses associated with extreme events – is seen as one approach that can confer some resilience on industries that may lose catch as a result of extreme events.
It is a very topical issue – you can read more in these papers.
- Hobday, A. J., L. R. Little, J. R. Watson and C. M. Spillman (2025). “Parametric Insurance for Climate Adaptation in Fisheries and Aquaculture.” Reviews in Fish Biology and Fisheries: https://doi.org/10.1007/s11160-11025-09920-11163.
- Watson, J. R., C. M. Spillman, L. R. Little, A. J. Hobday and P. S. Levin (2023). “Ensuring resilience to marine climate shocks through insurance.” ICES Journal of Marine Science 10: 2457–2469 https://doi.org/2410.1093/icesjms/fsad2175.
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