First Reinsurance Service has access to a market interested in underwriting Aqua-culture coverage in the Central America territory under the following conditions:

Conditions

• Species:
  

  Tilapias

• Territory:
  

  Central America including Belize and Panama

• Coverage:
  1. Loss of the Insured Stock
  2. Expenses in which reasonably the Insured incurs, solely and specifically in order to minimize or avert the risk of imminent loss
  3. Expenses in which reasonably the Insured incurs, solely and specifically in order to dispose of dead Insured Stock
• As a consequence of:

  The cover includes, but is not limited to the following:

  1. Pollution, including malicious poisoning, contaminated feed and, unless specifically excluded, algal/plankton blooms of a toxic nature
  2. Malicious Acts, Theft, Predators
  3. Flood, Tidal Wave
  4. Storm Damage, Subsidence, Landslip, Structural Failure, Breakage or Blockage of any part of the Water Supply System
  5. Drought, Fire, Lightning, Explosion, Earthquake
  6. Freezing, Frost Damage, Frazil Ice
  7. Mechanical Breakdown or Accidental Damage to Machinery and other installations
  8. Electrical Breakdown, Failure or Interruption of the electricity supply, Electrocution
  9. Deoxygenation due to Vegetation, Microbiological Activity or High Water Temperature.
  10. Any other change in concentration of the normal chemical constituents of the water, including super saturation with dissolved gases and change in pH or salinity
  11. Disease (as defined in the wording)

  In each case please refer to the terms and conditions of the policy wording. The assured must make sure that they maintain all equipment in good working order, and that they maintain back up systems and alarms to alert the farmer to immediate and potential problems.

• The coverage is subject to a Deductible percent which would be around 20% to 25% of value at risk at time of loss, depending of the description of the risk

• The rate is quoted by the market and usually fluctuates around 5% to 6% depending on the description of the risk

• The quoted rate is net to the market, and no Commission is applicable, so the Insured Company has to load the premium to include their commission

• The ceding company can take a retention in the risk if they wish, although underwriters will accept 100% if required

• Some of the Underwriting policies of the markets are:

  1. They are unlikely to accept any fish farm that has been in operation for less than 3 years, or has poor loss history;
  2. They requested a Minimum and Deposit Premium of 90%;
  3. All losses due to handling excluded
  4. All losses as a result of new pond construction excluded
  5. Claims Control Clause

The wording of the policy is attached and the following is a brief description of the coverage:

Aquaculture Insurance Solutions

What is covered?

I.    LOSS OF INSURED STOCK

Subject to the terms and conditions of this Insurance, This Insurance will indemnify to the Insured against the sudden and unforeseen Loss of the Insured Stock occurring during the Period of this Insurance.

II.  MITIGATION EXPENSES EXTENSION

It will indemnify to the insured for any expenses in which reasonably the Insured incurs, solely and specifically in order to minimize or avert the risk of imminent loss or actual loss of the Insured Stock, excluding, the cost of medication and veterinary costs or maintenance, provided, that the Insured produces to the Underwriter satisfaction the original receipts/invoices relating to such expenses incurred.

III. DISPOSAL COSTS EXTENSION

It will indemnify to the insured for any expenses in which reasonably the Insured incurs, solely and specifically in order to dispose of dead Insured Stock, provided that the Insured produces to the Underwriter satisfaction the original receipts/invoices relating to such expenses incurred.

What is excluded?

This Insurance specifically excludes losses due to:

• Were discovered at the time of Harvesting or Grading
• Are from cannibalism or sexual maturing
• Because mysterious disappearance or unexplained shortages
• Due to Natural Mortality, or a pre-existing condition which the Insured was aware of or should have been aware of
• Through intentional slaughter whether by order of an official body or otherwise

The following are also excluded:

• In no case shall this Insurance cover loss damage liability or expense due by war, civil war, revolution, rebellion, insurrection or civil strife or anything related to
• In no case shall this Insurance cover loss damage liability or expense arising from: Terrorist, Political Motive and Malicious Acts or anything related to
• This insurance does not cover legal expenses, legal benefits and/or liability, direct or indirect loss or damage caused by: Data and Computer Viruses
• Liabilities
• Pollution however this exclusion is also covering the suddenly and accidental pollution as follows:
  • In no case shall this Insurance cover any loss, damage, liability or expense directly or indirectly caused by, contributed to, in consequence of or arising from Pollution other than Pollution caused by a sudden, identifiable, unintended and unexpected incident which takes place in its entirety at a specific time and place during the Period of Insurance and other than algal or plankton bloom. All Pollution which arises out of one incident shall be deemed to have occurred at the time such incident takes place. For the avoidance of doubt and for this clause only, the definition of Pollutant excludes algal bloom.

Are there any WARRANTIES?

If the Insured fails to comply with any of the above warranties, the Underwriter be discharged from liability automatically from the date of breach and the Insured will be unable to recover the losses under this Insurance:

• Duty of Care:
  • Proper care and attention is currently provided for the Entire Stock and will continue to be provided;
  • Regular inspections of the Insured Stock will be carried out at the Location(s) to ensure that Entire Stock equipment is in the correct position, is in good working order and is in full and effective operation at all times;
  • All equipment will be serviced regularly in accordance with the manufacturer's instructions or guidelines;
  • All levees, banks, dykes and water conduits will be maintained in good order
• Stock Health: it is warranted that at the commencement of this Insurance the Entire Stock at any Location(s) are in sound health and free from any Disease or disability
• Protection of Stock
  • Upon the discovery of illness, disease or injury to any of the Insured Stock, the Insured warrants immediate and appropriate action will be taken which will include obtaining expert veterinary opinion, to treat and contain the illness, disease, or injury
  • The Insured and his employees shall use their best endeavors in doing all things reasonably practicable to avoid or diminish any loss and to ensure the health and safety of the Insured Stock
• Maintenance of Warning System
• Maintenance of Alarms and other Security Devices
• Changes to the Risk: The Insured will notify to Underwriters immediately or as soon as reasonably practicable of any material changes to the Entire Stock and/or the Location(s).

Are there some CONDITIONS PRECEDENT TO LIABILITY?

If the Insured fails to comply with any one of these conditions precedent to liability, then in the event of a claim the Underwriters will not be obliged to pay the claim:

• The Insured must notify to the Underwriter of any event giving rise to the loss of Insured Stock within 72 hours
• The Insured will permit to the Underwriter or his representative(s) to inspect the Insured Stock at any Location(s) and The Insured will take any action that either the Underwriter or his representative(s) may reasonably require
• The Insured will keep accurate and up to date Monthly Stock Declarations, which take into account the harvested amount, additional intake of stock (if applicable), Natural Mortality and loss transfer from each Holding Unit and send to the Underwriter the Monthly Stock Declaration at the end of each month