Shrimp aquaculture has evolved from small-scale coastal ponds to industrialized systems across tropical and subtropical regions, contributing to food security, rural employment, and foreign exchange. Leading producers (Ecuador, China, India, Vietnam, Indonesia) collectively produce over 70% of global output. India has grown rapidly through specific pathogen-free (SPF) whiteleg shrimp (Penaeus (Litopenaeus) vannamei) introduction, modernized pond management, and export-oriented production strategies, reaching 0.74 million tonnes (~6% global output) in 2024. Risks in shrimp farming include biological hazards, climatic hazards, and market risks (Hishamunda et al., 2014; Rahman et al., 2007). Shrimp farmers are often at the forefront of natural disasters such as cyclones and floods, particularly in coastal regions where shrimp farming is predominant (Rahman et al., 2017). Additionally, disease outbreaks like White Spot Syndrome Virus (WSSV) and Early Mortality Syndrome (EMS) have caused massive losses, sometimes wiping out entire harvests (Shinn et al., 2018). Recently emergence of Enterocytozoon hepatopenaei (EHP) leading to growth retardation has reduced production substantially among shrimp farming countries in the world (Thitamadee et al., 2015; Patil P. K. et al., 2021).

In this context, shrimp crop insurance emerges as a critical tool to mitigate these risks, offering financial protection and stability to farmers (Leung and Engle, 2008). By transferring some of the financial risks from farmers to insurance providers, shrimp crop insurance can safeguard investments, sustain farmer’s confidence and reputation in business, encourage best scientific management practices, and promote the overall growth of the sector. Therefore, integrating insurance with effective disease management strategies promises to enhance the resilience of shrimp aquaculture.

This article provides a review and comprehensive analysis of shrimp crop insurance globally, examining its benefits, challenges, and implementation in major shrimp-producing countries and developments in India as a case history. Further, this review evaluates global insurance strategies, derives lessons for emerging markets, and provides an in-depth analysis of India’s sector to inform policy recommendations. The paper also underscores the importance of integrating insurance with disease management, Better Management Practices (BMPs) and losses due to natural calamities. Reviving shrimp crop insurance products through institutional frameworks supporting shrimp aquaculture, with special reference to the Indian context were also examined. Recommended measures to enhance the sector’s resilience and sustainability through application of modern technologies for assessing crop loss for claim settlement have been discussed.

Natural hazards such as floods, droughts, storms, cyclones, extreme temperatures, and tidal waves can cause significant losses to harvestable stock, damage to farm infrastructure resulting in loss of income and employment. Biological risks include viral, microsporidian and bacterial pathogens causing mortality, poor growth, and reduced feed efficiency. Climatic risks such as cyclones, floods, and temperature extremes affect pond infrastructure and production cycles. Market risks involve global price fluctuations and demand changes. Integrated mitigation strategies include biosecurity, SPF broodstock, climate monitoring, and insurance mechanisms to manage financial exposure.

Some of the major risks to the global shrimp industry is reduced growth caused by EHP, acute mass mortalities by WSSV, mortalities at the early growth phase due to bacterial infections in addition to minor water-soil quality issues (Thitamadee et al., 2015). These risks reportedly inflict an estimated loss up to USD 1 billion to Asian shrimp farming and upto USD 6 billion loss to the global shrimp sector. Similarly, earlier studies from India estimated an annual disease loss of USD 1.02 billion (Patil P. K. et al., 2021) to the Indian shrimp industry from 2018 to 19 (see Patil et al., 2025) (Figure 1). Loss of production (t ha⁻¹crop⁻¹) was highest with infections due to WSSV (2.58), followed by EHP (1.80), mixed infections of EHP and WSSV (1.89), vibriosis (0.97) and other diseases (1.72). Although WSSV caused the highest loss of production (t ha⁻¹ crop⁻¹), EHP with a 17% probability of occurrence, accounted for a production loss of 0.08 million tonnes, with a corresponding revenue loss of USD 567.62 million while the WSSV, caused loss of 0.03 million metric tonnes, with a corresponding revenue loss of USD 238.33 million.

The extreme weather events such as cyclones, floods, and droughts have caused substantial damage to aquaculture assets in several regions, as evidenced by historical damage assessments in major shrimp producing countries including India (Muralidhar and Vijayan, 2016). These events have resulted in crop losses, infrastructure damage, and long-term economic impacts, underscoring the need for effective insurance and risk management strategies.

Insurance models include indemnity-based insurance, compensating farmers for actual losses, and parametric/index insurance, providing payouts triggered by predefined metrics (Ravisankar et al., 2025). Further, hybrid models combine both approaches for timely compensation and reduced moral hazard.

The indemnity-based insurance is a traditional model and includes “all risk” and “named perils” policies, covering either specifically defined risks or all possible perils causing stock mortality. These policies often cover additional expenses incurred by farmers who implement loss-mitigating measures, such as adopting BMPs during a disease outbreak or adverse weather event.

Index-Based (Parametric) Insurance is an innovative insurance model providing pay-outs based on specific indices such as weather parameters (e.g., rainfall, temperature, cyclone intensity). It operates on an “Area Approach,” linking specific “Reference Unit Areas” to “Reference Weather Stations” to assess compensation. This type of insurance is promoted as a climate change adaptation measure in developing countries, because of its lower transaction costs, faster pay-outs, and minimized adverse selection and moral hazards (Munich Re, 2009) (Figure 2). However, the effectiveness of parametric insurance depends on accurately correlating the index with actual losses; poorly designed indices can lead to increased basic risks, rendering the insurance ineffective. However, it is particularly attractive for smallholder farmers due to easy pay-outs based on specific trigger events, without the need to prove the extent of loss. For example, different countries adopt various types of aquaculture insurance based on local contexts (Ceballos and Kramer, 2019). China and Oceania predominantly use “all risk” types, whereas regions like Europe, the USA, and parts of Latin America often employ “named perils” types.

Insurance encourages farmers to invest in improved practices and technologies, nurturing industry growth and leading to higher productivity and profitability (Barange et al., 2018). The policy of providing insurance incentives to farmers who comply with BMPs and standards fosters sustainability and encourages responsible aquaculture (Bush et al., 2010).

Shrimp aquaculture insurance varies across countries depending on production scale, institutional support, and market integration. Leading producers provide key lessons for emerging markets like India. Countries like Ecuador demonstrate the benefits of linking insurance to cooperative structures and export markets, improving adoption and resilience. China employs state-backed insurance schemes integrated with cooperatives, while Vietnam has piloted government-supported cooperative insurance programs. Smaller producers, such as Thailand, Brazil, and Bangladesh, face challenges including low awareness, limited coverage, and fragmented smallholder systems, but innovative local approaches demonstrate that even small-scale systems can benefit from structured insurance and digital monitoring (FAO, 2022).

Aquaculture insurance schemes vary widely across countries, with common challenges such as limited coverage, more exclusions, high premium rates, inadequate claim processes, and low participation among small-scale farmers (Ravisankar et al., 2025). Enhanced technological integration, loss estimation methods, improved institutional frameworks, and the development of tailored insurance products are crucial to increase the effectiveness and uptake of aquaculture insurance globally.

Insurance policies across countries exhibit considerable variability in terms of coverage, premium rates, and criteria for risk assessment (Table 1). Basic coverage (BC) often includes standard risks like environmental and operational hazards, while comprehensive cover (CC) extends to disease and mortality risks, which are critical in aquaculture due to the high susceptibility to pathogens (Van Anrooy et al., 2022).

Cyclones have had devastating effects on aquaculture in many coastal nations worldwide, where farming species like shrimp, fish, and shellfish is a vital economic activity. For example, countries such as the Philippines, Bangladesh, India, Vietnam, Thailand, China, Indonesia, Japan, Myanmar, and the United States have all suffered severe aquaculture losses due to natural disasters. In 2013, Typhoon Haiyan ravaged the Philippines, leading to substantial infrastructure damage and the loss of fish and seaweed farms (Philippine Department of Agriculture, 2013). Cyclone Amphan in 2020 caused widespread destruction in shrimp farms across Bangladesh and India, as farmers suffered extensive stock losses and infrastructure destruction (Bangladesh Department of Fisheries, 2020). Other impactful cyclones include Cyclone Fani (2019), which disrupted shrimp and fish farming operations in India and Bangladesh, especially in Odisha and Khulna (IMD, Indian Meteorological Department, 2019). China’s aquaculture faced significant losses due to Typhoon Lekima in 2019, which heavily impacted fish farms in the Zhejiang and Shandong provinces. Thailand’s aquaculture industry was similarly affected by Typhoon Pabuk in 2019, which caused damage to shrimp and fish farms, while Japan’s pearl and shellfish farming operations faced disruptions due to Typhoon Hagibis in the same year (Department of Fisheries, 2019; Fisheries Agency, 2019). These events underscore the vulnerability of aquaculture to cyclones and the need for disaster preparedness.

The impact of storms is equally severe in Western and European countries where aquaculture is a significant industry. Norway, a leading producer of farmed salmon, saw infrastructure damage and fish losses due to Storm Frank in 2015 (Norwegian Directorate of Fisheries, 2015). Scotland’s aquaculture industry, also heavily reliant on salmon farming, faced challenges from Storm Ali in 2018, leading to operational disruptions and financial losses. In North America, Hurricane Katrina in 2005 devastated shellfish farms along the U. S. Gulf Coast, particularly in Louisiana and Mississippi, while Hurricane Dorian in 2019 caused substantial losses in Canada’s aquaculture sector, affecting salmon and shellfish farms in Nova Scotia (NOAA, 2005; Fisheries and Oceans Canada, 2019). With the increasing frequency and intensity of Atlantic storms, such as Hurricane Fiona in 2022 impacting Canada, the importance of aquaculture insurance is more pressing than ever (Aquaculture Association of Canada, 2022). Aquaculture insurance is crucial in these vulnerable regions, providing financial resilience to farmers by covering losses from extreme weather events. It enables faster recovery, supports food security, and stabilizes livelihoods, particularly as the sector faces rising climate-related risks.

India is the world’s third-largest producer of fish and the second-largest in aquaculture, accounting for 8% of the global supply. In the 2023–24 period, total fish production reached 17.8 million metric tonnes, a 22-fold increase since 1950 with inland fisheries contributing 13 million tonnes (75%) and marine fisheries 4.5 million tonnes (25%). Indian aquaculture production during 2022 recorded 10 million metric tonnes, in which 90% was contributed by the inland aquaculture (FAO, 2022). The fisheries sector contributes 7.3% to agricultural GDP and 1.2% to national GDP, with a growth rate of 10% compared to 4% in the overall agricultural sector. The shrimp aquaculture industry in India occupies nearly 0.17 million hectares of coastal land and provides livelihoods to about 100,000 farming families and numerous farm workers. Its extensive forward and backward linkages further strengthen the estimated rural employment to 1.2 million (ICAR-CIBA, 2020). As of 2024, an additional 1,200 hectares of inland saline aquaculture were under cultivation. Production increased from ~70,000 tonnes in 1994 to ~800,000 tonnes (6.2% global share) in 2023. Production is concentrated in the states of Andhra Pradesh (80.14%), West Bengal (6.06%), Gujarat (5.39%), Odisha (4.20%), Tamil Nadu (3.41%) (Figure 3) (MPEDA, 2025). Seafood exports amounted to 1.78 million metric tonnes, valued at USD 7.38 billion, with shrimp exports accounting for 0.72 million metric tonnes worth USD 4.88 billion, representing 40% of export quantity and 66% of export value (Figure 4). Vannamei shrimp dominate exports, comprising 92.7% of total shrimp exports at approximately 1.17 million metric tonnes. The predominant species cultivated is the whiteleg shrimp, accounting for over 90% of production. Other species include the tiger shrimp (Penaeus monodon) and scampi (Macrobrachium rosenbergii) (MPEDA, 2023; Ravisankar et al., 2020).

Before 1950, traditional and polyculture methods were used in Indian shrimp farming subsequently supplemental stocking and feeding were adopted. An organized pond-based farming of indigenous shrimp species was practiced during 1980s followed by semi-intensive culture of P. monodon by 1990s. During the mid 90s wide spread incidence of white spot syndrome necessitated the adoption of BMP and cluster farming systems followed by the introduction of SPF P. vannamei in 2009. Cultivation systems employed are diverse, ranging from traditional earthen ponds to advanced Recirculating Aquaculture Systems (RAS) and biofloc technology, enabling year-round production. Water sources such as creeks, canals, and the sea are utilized, and post-larvae up to stage 14 are stocked at high densities of 60 shrimp per square meter to maximize yields. Crop loss due to WSSV has reduced the average productivity from 2–3 metric tonnes ha⁻¹ during 1990s to around 1.0 metric tonnes ha⁻¹ by 2009 which has averaged at 7.0 metric tonnes ha⁻¹ during recent years due to technological advancements. During these transitions, feeding practices evolved from farm-made to formulated pellet feeds. Disease management progressed from application of indigenous antimicrobial formulations to stocking Polymerase Chain Reaction (PCR) screened WSSV negative post larvae.

Research initiatives through All India Coordinated Research Project (AICRP) on brackishwater aquaculture at Kakdwip, West Bengal in 1973 culminated in establishment of the Indian Council of Agriculture Research-Central Institute of Brackishwater Aquaculture (ICAR- CIBA) in 1987. Export promotion through MPEDA (TASPARC/OSPARC) during 1991 popularized tiger shrimp culture. In India, aquaculture insurance was introduced in 1985 (Parappurathu et al., 2017) covering brackishwater shrimp and inland fish farming for species like common carp, Indian carps, tilapia, catfish, prawn and shrimp with premium rates of 5–7%. All public sector insurance companies with reinsurance support of the General Insurance Corporation of India (GIC) provided aquaculture insurance during 1990s. In 2003, Agriculture Insurance Corporation (AIC) took over the implementation of the National Agricultural Insurance Scheme (NAIS) to provide insurance services to agriculture and allied activities, including aquaculture. The features of the earlier polices included perils like, natural disasters, diseases, and human activities like poaching. These policies experienced higher loss ratios, mainly due to white spot disease, low uptake due to distrust in claim settlement and absence of technology for verification and loss assessment which hindered the acceptance of these policies.

In 2010, Oceanaa (Oceanic Edibles International Ltd.) entered into a contract farming arrangement with the Indian Overseas Bank (IOB) to support shrimp farmers. Under this initiative, IOB provided loans covering up to 85% of the total cultivation costs, while Oceanaa supplied high-quality inputs such as seeds and feed to the farmers. This integration however, could not be successful due to inadequate policy support. Subsequent trials by Aquaconnect and Alliance insurance brokers during 2021 combining input supply and insurance also could not make headway due to issues in claim settlements (SAP, 2024). A pilot aqua crop insurance product floated by NFDB with OICL in 2021 in Madhya Pradesh, Odisha, Goa, Union Territory (UT) of Pondicherry, Karnataka, and Assam met with lukewarm response from farmers mainly due to non-inclusion of disease cover [PIB (Press Information Bureau), 2024].

The cost–benefit analysis of shrimp farming in India reveals that the total cost per hectare per crop cycle is approximately USD 20,683 which includes fixed costs of about USD 11,445 (for pond preparation, biosecurity measures, equipment, and infrastructure) and variable costs of around USD 19,538 (covering operational expenses like pond maintenance, inputs, seed stocking, feed, fuel, electricity, labor, and harvesting).

With an average yield of 8.40 metric tonnes ha⁻¹ and current farm gate prices (e.g., USD 4 kg⁻¹ for 60 count shrimp), the gross income amounts to USD 34,335 ha⁻¹ year⁻¹, resulting in a net profit of USD 13,652 after deducting total costs. However, rising input costs, feed prices increased by 25% post-COVID-19 to USD 1 kg⁻¹ and fuel prices rose by 25–30% coupled with decreased shrimp prices due to global market conditions, have tightened profit margins. Profitability challenges are evident as farmers struggle to break even at current market prices (USD 4–5 kg⁻¹), especially for smaller shrimp sizes (20 g) (Figure 5). Sensitivity analysis indicates that a 10% rise in input costs reduces net income to USD 11,584, a 10% fall in shrimp prices decreases net income to USD 10,219, and a 20% loss in output due to disease drops net income to USD 6785, highlighting the financial strain on farmers and underscoring the need for effective risk management and cost control strategies [National Bank for Agriculture and Rural Development (NABARD), 2024].

Despite impressive production figures, shrimp farmers face significant economic challenges. Production expenses have increased by 15–20% during recent years, exacerbated by a 25% rise in feed prices (from USD 1.23 to 1.47 kg⁻¹) and a 25–30% increase in fuel prices following the COVID-19 pandemic. The estimated cost of production ranged from USD 4.1–5.4 kg⁻¹ for 10 to 25 g shrimp, respectively, (Bhargavi et al., 2025). With market prices at or below production costs, particularly for smaller shrimp sizes (<20 g), farmers are unable to achieve profitability. This financial strain is intensified if farmers opt for credit due to interest payments, further increasing production expenses.

Risk assessments, as perceived and ranked by stakeholders of focus group discussions held by ICAR-CIBA in shrimp farmers conclaves across India (CIBA Annual report, 2024) reveal that diseases pose the highest risk to production, with a risk score of 9 out of 10, leading to complete crop loss while price fluctuations (risk score of 7) are influenced by global market dynamics and geopolitical conditions. Environmental risks, particularly extreme weather events like floods and cyclones (risk score of 8), can cause substantial damage to infrastructure and stock.

The progressive costs and returns in shrimp farming increase from the onset of the culture period, with cumulative expenses accruing daily needing to be understood (Figure 5). The critical financial threshold for farmers is typically reached at around 60 days of culture (DOC), representing the breakeven point where cumulative returns meet or exceed cumulative costs. This breakeven point is crucial because it determines whether the farmer can recover the investment made in the crop or not. On the other hand insurance covers losses to the farmer upto 80% of the input cost which ceases at this breakeven point, unless in the cases of extreme weather events where the total crop is lost without any salvage recovery.

If a shrimp crop fails due to viral diseases such as WSSV before the reaching the marketable size the farmer incurs a total loss with no salvage value. This total loss scenario underscores the importance of having insurance coverage during the early culture period when the financial risk is higher. The salvage value accrued after the shrimp attain the marketable size helps offset the losses by covering at least the variable costs incurred up to that point. Farmers require insurance products that specifically address the risk of losses before the breakeven point, including comprehensive disease coverage, to ensure financial sustainability.

The concept of salvage value is integral to calculating insurance premiums and indemnities in shrimp crop insurance. Insurers must consider the potential salvage value when assessing the risk and determining premium rates. If a loss occurs after the breakeven point, the insurer’s liability decreases because the farmer can recoup a portion of the costs through the sale of the partially grown shrimp. This reduction in potential claims can be reflected in lower premium rates for coverage extending longer periods.

The insurance market potential is significant, particularly in hotspots such as Andhra Pradesh, West Bengal, Gujarat, Odisha, and Tamil Nadu, where the majority of shrimp farming occurs. The insurance market size can be estimated using the formula:

The maximum possible premium that could be collected by insurance companies is calculated using the above formula across various states of India (Table 2) which gives an expert estimate of insurance business possible in India.

The ability to salvage the crop after the estimated breakeven point reduces the financial liability for both the farmer and the insurer, as the potential indemnity payments decrease due to the incomplete to complete recovery of total input costs through sales.

Farmers believe that the Government should offer subsidized insurance coverage as they play significant roles in the country’s economy. They have valid reasons for this viewpoint. To begin with, insurance companies require higher premiums, ranging from 4 to 8.5%, which could be a financial burden for the farmers. Moreover, insurance companies often stop underwriting unilaterally after crop failure due to WSSV in 1994–95, leaving the shrimp farmers unprotected. It is also to be noted that crop insurance typically does not cover damage to equipment and infrastructure, further reducing its benefits to farmers. Additionally, the complex documentation process and the detailed terms and conditions, which include much exclusion apart from “named perils,” create challenges for farmers. Difficulty in timely intimation to insurance companies about emergency harvest situations, result in delay in loss assessment and claim settlement. Any delay in assessment beyond 6 to 12 h leads to quality deterioration of the harvest adding to the financial losses. Therefore, farmers stress the importance of a more accessible and farmer-friendly insurance products to effectively manage and mitigate risks. The success of an insurance product design hinges on the farmer’s willingness to pay the insurance premium (Ravisankar et al., 2025).

Earlier studies reported that 95% of Bangladeshi farmers were willing to pay USD 99 (Akter et al., 2021) while Vietnamese farmers were willing for USD 276–291 (Duy, 2016). A recent study showed willingness of Indian shrimp farmers to pay upto USD 120. The farmer’s WTP was dependent on socio-economic factors like age and experience while BMP adoption and farm registration reduced WTP suggesting the need for tailored insurance products to balance premium affordability and risk coverage (Ravisankar, personal communication).

Insurance companies remain reluctant to re-enter the shrimp crop insurance segment due to enduring concerns stemming from past history of the inundation of indemnity claims received from shrimp farmers during 1996, ultimately prompting their withdrawal. Alongside historical challenges, various technical hurdles persist. These include a shortage of aquaculture professionals within insurance companies and a general lack of understanding among staff regarding modern culture systems and practices. Exaggerated worries about falsified claims and moral hazards further complicate the insurance landscape. Additionally, there is a pervasive fear among insurers regarding potential massive losses triggered by climate extremes, epidemics, or the emergence of new diseases in shrimp farms. Meeting the demands for an expert workforce and the associated costs remain daunting, particularly in the specialized field of aquaculture. Moreover, the logistical complexity of premium collection from a vast number of farmers often located in remote areas nationwide adds to the operational challenges faced by insurance companies, further deterring their re-entry into this crucial sector.

Insurance coverage is provided by Agriculture Insurance Company of India (AIC), MPEDA-linked schemes, and select private insurers. Products cover indemnity-based mortality/production loss and pilot parametric schemes. In 2023, approximately 120,000 farmers were enrolled, with total premiums of ~₹50 crore (USD 5.6 million); public schemes cover ~75% of participants. Digital monitoring, streamlined claims, and cooperative aggregation improve adoption.

Institutional coordination among MPEDA, NFDB, NABARD, state fisheries departments, private insurers, and cooperatives is crucial for data centralization, technical support, and timely claim processing. Barriers include affordability, limited awareness, trust deficits, and farm fragmentation. Group insurance models, digital claims systems, and training programs can substantially improve participation.

The ICAR is the apex body for conducting research and training in the area of agriculture and allied sectors in the country. Research on diversified and sustainable brackishwater culture species and systems along with human resource development is being conducted at ICAR- Central Institute of Brackishwater Aquaculture (CIBA) along with seven other ICAR fisheries research institutes. The institutes develop and transfer various technologies to address the evolving needs of the sector.¹

The established institutional framework is presented in Figure 6 and shows how the various organizations and departments serve different purpose with the ultimate goal of sector development (Geetha et al., 2024). A separate Ministry of Fisheries, Animal Husbandry, and Dairying, was established in 2019 to oversee the development and regulation of the fisheries sector in India. The ministry formulates policies for enhancing productivity and mitigating risk through instruments like insurance for sustainable aquaculture. Fisheries and Aquaculture Infrastructure Development Fund [MoFAHD (Ministry of Fisheries, Animal Husbandry & Dairying), 2024] was created during 2018–19 to address the infrastructure requirement for fisheries sector. Recently a pilot scheme to promote aquaculture insurance was implemented under Pradhan Mantri Mathsya Sampada Yojana (PMMSY, 2021–2025) followed by a subplan, PMKSSY (2024–2027) which is expected to cover 0.1 million ha with one-time premium incentive of USD 300 ha⁻¹. Provincial/state government agencies implement the schemes for aquaculture development [Department of Fisheries (DoF), 2024].

The aquaculture activities are being regulated by the Coastal Aquaculture Authority (CAA) established in 2005 to ensure sustainable development.² The Ministry of Environment and Forests (MoEF, 2022) oversees the environmental impact assessment (EIA) process for large-scale shrimp aquaculture projects. The Export Inspection Council (EIC) ensures the quality and safety of exported shrimp products while the Food Safety and Standards Authority of India (FSSAI) ensures the safety of fish and fishery products in the domestic markets [Export Inspection Council (EIC), 2024].

Development organizations like, National Fisheries Development Board (NFDB) is a nodal agency for the development of the fisheries and aquaculture sector in the country implementing various schemes and initiatives to support the development of aquaculture, including financial assistance, training and other transfer of technology programs [National Fisheries Development Board (NFDB), 2024]. Similarly, the Marine Products Export Development Authority (MPEDA) under the Ministry of Commerce and Industry is responsible for promoting and regulating the export of marine products, including shrimp from India. This has multi-faceted objectives, including market development, quality control and certification, capacity building and skill development. The National Centre for Sustainable Aquaculture (NACSA) under MPEDA promotes sustainable aquaculture practices through training programmes, workshops and field demonstrations (MPEDA, 2024).

National Bank for Agricultural and Rural Development (NABARD) is the apex refinancing institution, which finances the agriculture and allied sectors through banks which offers tailormade financial services to the aquaculture farmers. The state cooperative societies also assist farmers to meet their capital requirements through short- and medium-term loans [National Bank for Agriculture and Rural Development (NABARD), 2024]. Furthermore, farmers’ associations and professional societies promote aquaculture development through knowledge sharing and advocacy to support the sustainable development of the sector. The collaborative efforts of ministries, financial institutions, and farmer organizations address challenges and manage risks which significantly enhanced the vibrancy and resilience of the Indian aquaculture sector.

Despite record growth, small farm holdings, disease outbreaks, environmental degradation, market volatility and climate change continue to pose substantial challenges. Farm intensification and inadequate resource availability leads to production risk and reduced profits. Fluctuating market prices, disease outbreaks and the impacts of climate change, including extreme weather events, pose major risk to farmers. Since, most of the shrimp farmers (89.3%) in India operate on farms smaller than 2 ha, often constrained by limited resources, inadequate infrastructure, and poor access to credit and insurance (CAA, 2024).

The National Fisheries Development Board (NFDB), under the Pradhan Mantri Matsya Sampada Yojana (PMMSY), is implementing (2021–2025) a pilot shrimp crop insurance scheme in selected states, focusing on brackishwater and freshwater shrimp culture. The scheme aims to provide financial support to farmers by compensating for losses due to unforeseen weather events, protecting them from production risks by studying the feasibility and scalability of aquaculture crop insurance.

Under PMMSY, NFDB is implementing the product through ICAR-CIBA by providing premium subsidies in Tamil Nadu, Andhra Pradesh, and Gujarat. The Union Cabinet approved the “Pradhan Mantri Matsya Kisan Samridhi Sah-Yojana” (PMMKSSY), a Central Sector Sub-scheme under PMMSY, to formalize the fisheries sector and support micro and small fisheries enterprises, with an investment of over USD 981 million from 2023 to 24 to 2026–27 across all States/UTs. The scheme aims to create appropriate insurance products covering at least 0.1 million ha of aquaculture farms and provides a one-time incentive of 40% of the insurance premium cost, up to USD 409 ha⁻¹ with maximum of 4 ha. For intensive aquaculture methods like cage culture and RAS, a similar 40% incentive is provided, with a maximum of USD 1,635 for units up to 1800 m³. Scheduled caste, scheduled tribe, and women beneficiaries receive an additional 10% incentive. This initiative is expected to encourage insurance companies by establishing a strong market for shrimp insurance and supporting the sustainable growth of the aquaculture sector.

ICAR-CIBA, through collaborative efforts with stakeholders, has facilitated the formulation of comprehensive shrimp insurance policies tailored to the specific needs of shrimp farmers. These efforts have led to the launch of insurance products by the Oriental Insurance Company and Agricultural Insurance Company Limited. The initiative began with strategic collaborations and high-level meetings on aquaculture crop insurance, culminating in formation of a “Working Group” during 2012 tasked with finalizing the modalities for an Aquaculture Crop Insurance scheme to be implemented by NFDB. Subsequently, during 2022 consensus was arrived at between farmers and insurance companies on premium rates, eligibility criteria, and pilot implementation strategies, setting the stage for a customized comprehensive insurance framework.

Through meticulous research and collaboration, the proposed shrimp insurance policy addressed the critical gaps and was tailored to the specific needs of shrimp farmers. Additionally, capacity-building initiatives and consultation meetings facilitated knowledge exchange and collaboration among stakeholders, further enhancing the efficacy of shrimp insurance schemes. The culmination of these efforts led to the launch of the shrimp insurance scheme during Nov. 2022. Oriental Insurance Company unveiled their latest insurance product for shrimp farming, marking a significant milestone. The second insurance product by Agricultural Insurance Company Limited of India was launched during February, 2023 which was developed with the technical support of ICAR-CIBA. Subsequent initiatives, including training workshops, sensitization programs, and national consultative workshops, further propelled the adoption and implementation of shrimp insurance across the country. Currently the institute is working for development of a parametric insurance product with the insurance sector. Through relentless advocacy and collaboration, the institute continues to safeguard the livelihoods of shrimp farmers and promote sustainable growth in the aquaculture industry (Figure 9).

Due to the earlier experience both the farmers and insurance providers were apprehensive about shrimp crop insurance. The farmers were expecting complete indemnity payouts, partial loss cover, compulsory disease and natural calamities at lower premium rates. Additionally, they were expecting support from the state in covering the premium. However, the insurers insisted on 80% indemnity payouts for the total loss exceeding 70% mainly for natural calamities. Training programs were conducted to develop a pool of professional assessors for estimating the loss. Efforts were made by ICAR-CIBA to reduce the trust deficit between the farmers and insurance companies. A consensus was arrived at following the series of stakeholder interactions. The insurance companies were made aware of the technological advances that happened in shrimp aquaculture in the past two decades reducing the vulnerability to disease and weather perils.

The teething problem in development and release of policies was noticed and it was possible only to write six policies during the first year, 2022 without any claims. Subsequently, around 700 ha of farms were insured with claims paid out for 20. The delay in the processing of claim settlement was noticed due to conflicts between farmers and insurers on terms and conditions.

This review paper on aquaculture insurance will serve as a strategic knowledge interface for a global as well as the Indian context, connecting: social demands (e.g., risk protection, justice, equity) [SDG 1, SDG 10, SDG 16]; institutional mechanisms (e.g., financial products, legal frameworks) [SDG 8, SDG 13, SDG 14]; governance structures (e.g., regulatory bodies, SDG frameworks) [SDG 16, SDG 17]. Furthermore, it can reframe aquaculture insurance not merely as a financial instrument, but as a lever for sustainable, inclusive, and participatory development, aligning directly with multiple SDGs — particularly: poverty alleviation [SDG 1]; reducing inequality [SDG 10]; climate resilience and sustainable aquaculture [SDG 13, SDG 14]; strong institutions and justice [SDG 16], and global and local partnerships [SDG 17].

Policy and practice implications include the need for institutional coordination among MPEDA, NFDB, AIC, state fisheries departments, and private insurers to streamline claim processing, provide technical support, and maintain centralized databases. Digital monitoring and early-warning systems for disease outbreaks (WSSV, EHP) and climatic hazards enhance the accuracy of parametric triggers and enable timely interventions. Farmer awareness and training programs improve understanding of insurance benefits, biosecurity, and claim procedures, fostering trust and higher adoption. Hybrid indemnity-parametric insurance products provide timely compensation while reducing moral hazard, addressing both biological and climatic risks effectively. Finally, government-backed premium subsidies are essential to ensure affordability and broad participation, particularly among smallholder farmers.

India’s shrimp farming sector navigates the complexities of a rapidly changing environment, and hence implementation of robust shrimp crop insurance mechanisms emerges as a crucial imperative. To ensure the sustainability and resilience of the industry, it is essential to adopt innovative strategies that address the specific needs and challenges faced by shrimp farmers. This includes exploring options for affinity insurance, leveraging partnerships with seed and feed suppliers, and promoting group insurance schemes within cohesive farming clusters. Additionally, measures such as integrating aquaculture into national disaster relief schemes, providing Goods and Services Tax exemptions for shrimp crop insurance, and establishing insurance stabilization funds can further strengthen the sector’s ability to withstand unforeseen challenges and disruptions.

To minimize the net cost of premium subsidies, adopting as “cup and cap” crop insurance approach is essential. Under this approach, insurance companies would cover claims that fall between 80 and 110 percent of the gross premium. If claims are below 80 percent of the gross premium, the Government will issue a refund. Conversely, if claims exceed 110 percent of the gross premium, the Government will cover these claims through the insurance companies.