Boat insurance: High cost acts as a deterrent

Investigation into the incident revealed that a cigarette stub discarded carelessly triggered the inferno. What worsened the blow was that none of the boats affected by the blaze were insured. 
Image used for representational purpose.
Image used for representational purpose.

VISAKHAPATNAM: The fire that engulfed the Zero Jetty at the fishing harbour in Visakhapatnam destroyed over 40 boats on the night of November 19, amounting to a loss of over Rs 12 crore.

Investigation into the incident revealed that a cigarette stub discarded carelessly triggered the inferno. What worsened the blow was that none of the boats affected by the blaze were insured. 

Despite the high cost of the vessels and numerous threats they face, including damages caused by disturbances during cyclones and frequent fishing ventures, none of the fishermen opted to insure 
their boats. The reason, a few fishermen explained, was the high cost of insurance premiums coupled with minimal returns. 

Speaking to TNIE, P Durga Prasad, a fisherman whose boat was completely gutted in the accident, elaborated on the financial challenges faced by fishermen in insuring their vessels. He said, “The cost of a medium-sized boat is around Rs 35 lakh. Insurance cover for such a vessel comes with a hefty price tag of approximately Rs 3.5 lakh per year, equivalent to nearly Rs 29,000 per month. The monthly premium can be compared to the average salary in today’s world. Even an insurance cover with the lowest of premiums falls beyond our financial means.” 

Acknowledging that boats do get damaged during cyclones, he said, “The amount we spend on getting them repaired is relatively lower than  the insurance cost.”

Prasad added, “Even if we were to invest in insurance, the returns would be minimal. For instance, after the Hudhud Cyclone in 2014, a few fishermen had applied for insurance of Rs 20 lakh, but received only around Rs 12 lakh.”

Concurring with Prasad’s opinion, another boat owner K Narsing Rao said, “My full-sized boat, valued at Rs 45 lakh, and the contents on board worth Rs 5 lakh were burnt to flames. In June, I invested around Rs 9 to Rs 10 lakh for repairs, including replacing the sealed gearbox and seal engine. These parts are expensive. Despite making profits, the high cost of equipment and repairs, which are not fully covered by insurance, often deter us from getting an insurance cover. Instead, we invest in repairing our boats from time to time.” 

Explaining the fishermen’s perspective, Joint Director for Fisheries Department (Visakhapatnam) Vijaya said, “Income earned by a fisherman today serves as tomorrow’s working capital. They invest their earnings for their upcoming journeys at sea. Consequently, any savings are typically earmarked for unforeseen boat repairs. One significant factor contributing to their hesitation in obtaining insurance is the high cost of premiums, which offers minimal returns.

Fishermen faced problem in insuring their vessels:

P Durga Prasad, a fisherman whose boat was completely gutted in the accident,  elaborated on the financial challenges faced by fishermen in insuring their vessels. He said, “The cost of a medium-sized boat is around Rs  35 lakh. Insurance cover for such a vessel comes with a hefty price tag of approximately Rs 3.5 lakh per year, equivalent to nearly Rs 29,000 per month.”

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