INSURABILITY OF FISH DISEASES (Continuedfrom page 32 is an excellent example of a non-insurable disease that presents opportunities for moral hazards. The disease is of unknown origin and is immediately identified by the producer. When this disease strikes a producer will attempt to feed but no fish come to the surface of the pond and appear to have literally disappeared. Although this is an acute event it presents opportunities for insured individuals to remove fish from a pond and then file a false claim. No claim can be made when there are no dead fish available to be counted and valued. This makes the disease uninsurable. Protecting insured crops from moral hazards is only one aspect of developing a solid insurance product. Another issue that must be considered is adverse selection. A policy should not allow poor management practices that result in losses to be paid out. This will result in higher premium rates for everyone and cause producers who employ good management practices to stop buying insurance that is too expensive for their risk exposure level. As the better producers stop buying insurance the remaining pool of insured operations have higher risk levels, higher payouts and eventually premium levels will be so high that the insurance product will fail. Two fish diseases that illustrate this point are bacterial gill disease of trout and vibriosis affecting salmon. These diseases are ineligible for insurance because management practices can prevent outbreaks, with vaccines for vibriosis, or outbreaks can only result from poor management, as in bacterial gill disease (Forster 2003). Finally, another example of a noninsurable disease is Aeromonas, which is a bacterium that infects catfish. This bacterium occurs after fish are already weakened by other diseases. Because Aeromonas is not the primary cause of loss, it is not eligible for insurance. Mixed Conditions for lnsurability As mentioned before, there are several diseases with attributes that make them insurable while other attributes tend to classify them as uninsurable. These diseases are considered mixed conditions for insurability and will either need further examination or, possibly, additional policy language to be incorporated into an insurance policy. Infectious hematopoietic necrosis (IHN) is a disease affecting trout production. This disease causes acute losses at warm temperatures, has no treatment and is exotic to the east coast of the U.S.-characteristics favoring its insurability. However, this disease causes chronic losses at cooler temperatures and it is endemic to areas such as Idaho, where some producers may purposefully expose their fish to the disease to help the fish stock build resistance, but this also kills some of the fish. Because of these traits, the disease may be insurable in one region of the country but not others or language may need to be inserted into the policy to prevent coverage at facilities with a history of purposefully exposing the fish to the disease. Another example of a mixed condition for insurability disease is Saprolegnia, winter fungus, influencing catfish production. Outbreaks of Saprolegnia are weather-related, cannot be prevented and have no industry standard for treatment. The challenges associated with insuring this disease include chronic losses resulting from occurrences of the disease in the winter when dead fish sink to the bottom of the pond (Tucker et al. 2004). An insurance adjuster would be unable to estimate the size of the fish loss event since the fish die over a prolonged period of time and cannot be accurately counted. This disease may not be insurable unless alternative methods are devised to count fish losses. Challenges Related to Insuring Fish Diseases The task of classifying fish diseases as insurable or non-insurable is quite complex. As more information is learned about diseases and preventive management practices and treatments are developed, some diseases may no longer be insurable. In addition, the risk of diseases such as VTC, ISA, SVC, and the exotic strain of VHS pose major threats to producers. These and other exotic and emerging diseases may be the strongest candidates for insurance because they can have devastating affects on producers and generally adhere to the insurability criteria inasmuch as there are limited or no management practices presently available to prevent or treat outbreaks. The greatest challenge in developing coverage for exotic and emerging diseases is to determine appropriate premium rates given that the frequency distribution of significant loss events and the magnitude of each loss outbreak distribution is not known. Notes 1 Department of Agricultural Economics, P.O. Box 5187, Mississippi State University, Mississippi State, MS 39762 USA. E-mail: sempier@agecon.msstate.edu 2Specific species addressed include catfish [channel catfish (Ictalurus punctatus), blue catfish (Jctalurus furcatus), and channel-blue hybrids], Atlantic salmon (Salmo salar), trout [rainbow trout ( Oncorhynchus mykiss), brook trout (Salvelinus fon tinalis), and brown trout (Salmo trutta)], and baitfish [golden shiners (Notemigonus crysoleucas), fathead minnows (Pimephales promelas), and common goldfish ( Carassius auratus)] . Acknowledgments The authors wish to thank those individuals with aquaculture disease knowledge and experience used in this paper. These individuals include: K. Amos, S. Belle, D. Brouchard, A.C. Camus, G. Fornshell, A.E. Goodwin, L. Gustafson, WG. Hemstreet, J.M. Hinshaw, M. Kent, R. Kinnunen, E. Park, D. Ramsey, and N. Stone. This publication was made possible through support provided by USDA, Risk Management Agency, Federal Crop Insurance Corporation through Mississippi State University under WORLD AQUACULTURE 69
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