The USDA’s Shellfish Pilot Crop Insurance Program, first made available for the 2024 crop year, offers oyster farmers producing container-grown oysters for the half shell market in select U.S. counties actual production history-price component (APH-PC) insurance that provides protection against perils including qualifying storms, excessive heat or freezing during a low tide event, and low salinity caused by excessive rainfall. Additionally, growers can purchase Hurricane Insurance Protection – Wind Index (HIP-WI) as an add-on to their APH-PC coverage. HIP-WI is an ‘event-driven’ policy that provides indemnity payments when a qualifying storm is determined to have occurred in the grower’s county or an adjacent county, regardless of storm-related losses.
The Shellfish Pilot Crop Insurance Program provides eligible oyster growers with protection against revenue losses associated with environmental hazards. To make informed decisions regarding the protection provided by the program relative to the costs of coverage, oyster growers need information on how this relatively new program would have impacted farmers in prior years through indemnity payments. However, the ability to measure historical losses associated with APH-PC qualifying perils is extremely limited due to the newness of the oyster aquaculture industry in Florida. Most oyster farmers have been in business for less than 10 years, resulting in limited actual loss data. The ‘event-driven’ nature of the HIP-WI coverage offers a better opportunity to evaluate potential returns of coverage to growers based on qualifying storms. This research project examines historical rates of qualifying storms in comparison to the costs of coverage for the 2026 crop year, by county for Florida growers to assess the cost-effectiveness of HIP-WI coverage.
The analysis presented focuses on HIP-WI payments due to the ability to accurately estimate indemnity payments for this program, given the ‘event-driven’ nature of the coverage. While analysis of APH-PC indemnity payments would require information on farm-specific losses associated with qualifying perils, historical HIP-WI payments can be estimated at the county level based on storm occurrence data. Using historical qualifying storm data provided on the USDA Risk Management Agency (RMA) HIP-WI website and county-level cost data, we estimate expected returns of purchasing coverage based on storm occurrence rates over the last 5, 10, and 20 years. Additionally, our analysis separately evaluates the expected returns of the tropical storm option associated with HIP-WI coverage for Florida growers by county to determine if this additional coverage is cost-effective given historical rates of tropical storm occurrences.