Swiss Re designs index to protect crab farmers
Swiss Re has partnered with China insurer China Pacific Insurance to launch a temperature-index insurance scheme designed to provide protection to Chinese crab farmers against the threat of hot weather killing their crabs.
The hairy crab industry is worth $73 million in China. The insurance product will protect some 3,000 crab farmers in Jiangsu and Zhejiang provinces. The policy will be triggered if temperatures exceed 37.5 degrees Celsius for three consecutive days.
Last year, Jiangsu Province, which surrounds Shanghai, had extremely hot weather. This killed many crabs, leading to huge losses for farmers. They now have the option to buy one-year, two-year or three-year insurance coverage against high temperatures.
Yuanyong Long, Swiss Re’s agricultural expert for China, said: “This product compensates the hairy crab farmers for the loss output due to persistent high temperature, measured by the weather data provided by meteorological stations.”
He added: “With the increase in large-scale farming in China, weather exposure will become more concentrated, hence the demand for weather insurance will increase. By limiting weather exposure, farmers and agricultural firms can have better access to external financing.”
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