Research scientists are working on the problem of insurance being problematic for lost fish catches. Photo: Danny Casey/AAP PHOTOS

Farmers can insure their crops from storm losses but fishers have no such protection from environmental catastrophes that devastate marine life.

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The seafood industry instead relies on government support following events such as the devastating algal bloom in South Australia which has rocked local fishers.

This leaves marine industries exposed and seafood supply interrupted, CSIRO Sustainable Marine Futures Program research scientist Alistair Hobday says.

“When we have fishing disasters, either the government pays or nobody does, and that makes our seafood industry vulnerable,” he told AAP.

Uncertainty and delayed payments can cripple small businesses trying to pay bills and supply food to Australians.

The fishing and aquaculture industries also face a host of worsening challenges from climate change, which fuels marine heatwaves, pest outbreaks and other harmful conditions for sea life.

“What if there was a mechanism where they were self-sustaining and self-supporting through insurance?” Dr Hobday said.

He and his colleague Rich Little have started an academic working group with overseas colleagues to explore opportunities for financial products that help reduce environmental risk for marine industries and encourage them to adapt to the global temperature rise.

Dr Little, a senior research scientist at the federal science agency, said the focus was on parametric insurance, which differed from the better-known kind triggered by observable losses such as a destroyed crop or flooded home.

Missing fish are harder to prove, so instead, insurance payouts would be triggered once certain climate-related parameters were met, such as specific ocean temperatures being exceeded.

“That’s the difference between indemnified insurance, where you get paid for your losses, versus parametric insurance, where there’s a parameter that’s supposed to represent those losses,” Dr Little said.

The seafod industry must rely on government support as insurance for lost catches is challenging. (Steven Saphore/AAP PHOTOS)

Insurance products should actively encourage adaptation to climate change rather than allow businesses to continue business as usual.

In exchange for reduced premiums, marine industries could be required to invest a small fraction of every insurance payout into adaptation and resilience, for example.

In aquaculture, that money could be invested in breeding a heat-resistant salmon, or for fishers, planting mangroves or other habitats that support fish recovery.

The duo see a “window of opportunity” for insurance, where it provides the capital needed to help marine industries adapt to rising temperatures without suffering full financial ruin.

“If every year was going to be a safe one, then a marine business would have more money to do adaptation investment with,” Dr Hobday said.

“But if two years out of 10 are unsafe, the business is always just hanging on, on the edge, just surviving.”

A widespread algal bloom has disrupted SA’s local fishing industry and led to temporary bans. (Matt Turner/AAP PHOTOS)

The working group’s early conversations with insurers have raised questions around profitability and affordability.

Pricing risk in a way that is appealing to both insurers and the fishers buying it is challenging, and there could be opportunities to involve philanthropic or government funds to close gaps.

A benefit of a thriving marine insurance ecosystem could be the capture of more information about the ocean.

“Insurance could provide an incentive to collect that information - get a better estimate of actually how many of each species are out there, and how they might respond to a changing climate,” Dr Little said.

Australian Associated Press

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