Tsunami Impact on the Fishing Industry. Koji Okumura Underwriter, Munich Re

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1 Tsunami Impact on the Fishing Industry Koji Okumura Underwriter, Munich Re

2 Agenda Damage from Tohoku EQ/Tsunami Recovery of Fishing Industries Fishing Vessel Insurance Challenges, Efforts, and Risk Management Conclusion

3 Damage from Tohoku Earthquake in

4 Tohoku Earthquake Magnitude 9.0: The largest EQ in Japanese record history Japan Seismic Intensity Scale 1 (lowest) 7 (highest) Epicenter Source: Japan Meteorological Agency

5 Height of the Tsunami The marks of tsunami run-up over 10m were found in this wide area Epicenter Source: Japan Meteorological Agency

6 The Sanriku Coast One of the world's top three fishing spots The warm current from South (Kuroshio) meets the cold current (Oyashio) from North at Sanriku Coast. Many types of fish gather in this confluence of the two currents. Iwate Miyagi

7 Damages on Fishery Industry 99.3% of the damage are concentrated on 7 provinces on the east coast. Major Damage Fishing Vessels Fishing Ports and Facilities (ports) Acquaculture Facility No of Damaged Items Amount (USD million) 28,612 (vessels) 2, (ports) 10, Acquaculture Stock 751 Common Facilities 1,725 (facilities) 1,572 Total 15, Source: White Paper on Fisheries 2012 (MAFF)

8 Recovery of Fishing Industry

9 Recovery of Fish Capture Volume / Amount % of Volume / Monetary Amount before Tohoku EQ in % 87% 93% 90% 81% 79% 75% 70% 70% 74% 70% 62% 50% 47% 39% 25% Capture Volume Capture Monetary Amount Source: White Paper on Fisheries 2016 (MAFF) 20

10 Recovery of Fishing Ports / Wreck Removal Number of Ports for Landing Quay Function 100% 80% 60% 40% 20% 0% 83% 264 Ports 47% 36% 96% 307 Ports 31% 65% 99% 316 Ports 17% 82% 2013/ / /01 Full Recovery Partial Recovery Progress of Wreck Removal Stationary Fishing Site 95% 99% Aquaculture Site 75% 99% 40% 50% 60% 70% 80% 90% 100% 2012-Mar 2017-Jan Source: White Paper on Fisheries 2016 (MAFF) 10

11 The Number of Recovered Fishing Vessels About 29,000 fishing vessels were struck and damaged by Tsunami and EQ in The recovery target was set as 20,000 vessels and % below is against the target. 20,000 92% Unit: Vessel 100% 16,000 77% 80% 18,439 12,000 46% 15,308 60% 8,000 40% 9,195 4,000 20% / / /12 0% Fishing Vessels Against Target Source: White Paper on Fisheries 2016 (MAFF)

12 Aquaculture Products: Unit: Ton 15,000 10,000 5,000 - Scallop 79% 83% 62% 34% 11,677 12,313 9, % 5, % 60.0% 30.0% 0.0% 4,000 2,000 - Oyster 53% 59% 37% 18% 9% 1,476 2,139 2, % 60% 30% 0% 40,000 30,000 20,000 10,000 - Wakame Seaweed 79% 88% 67% 75% 71% 27,379 30,414 23,100 25,799 24,597 11% 3, % 80% 60% 40% 20% 0% 20,000 16,000 12,000 8,000 4,000-41% Kelp 61% 50% 52% 39% - 0% 5,633 8,502 6,904 7,205 5, % 80% 60% 40% 20% 0% 15,000 10,000 Salmon 79% 81% 88% 82% 64% 12,159 11,619 11,978 5,000 13,007 9,448 0% - - 0% Source: White Paper on Fisheries 2016 (MAFF) 100% 80% 60% 40% 20%

13 Fishing Vessel Insurance

14 Fishing Vessel Insurance System Fishing Vessel Insurance Association (Nihon Gyosen Hoken Kumiai) insures majority of the fishing vessels in Japan. It covers fishing vessels up to 1,000 ton. It s mutual insurance and reinsured by government for catastrophic losses. 167,111 insured fishing vessels in Coverage of Hull & Machinery (Total Loss, Partial Loss, Rescue Fee) and War. P&I coverage is available as a separate policy. 200,000 No of Insured Vessels 190, , , , , Source: Japan Fishing Vessel Insurance Association (Nihon Gyosen Hoken Kumiai)

15 Fishing Vessel Insurance: Historical Result Premium increase in 2014 was due mainly to review of premium rate after the catastrophic loss in The review is done every 3 years. CCY: USD (JPY = 1USD: Average ROE of last 2 years) 500,000, million 400,000, ,000, ,000, million 107 million 100,000, Premium Paid Claim Source: Japan Fishing Vessel Insurance Association (Nihon Gyosen Hoken Kumiai)

16 Challenges, Efforts and Risk Management

17 Challenges Fishing Industry Facing Aging and declining number of fishermen Average age of fishermen is 56.2 The number of fishermen: 222,000 in 2008 to 160,000 in Declining Consumption of Fish Declining domestic fish consumption. Less than meat consumption per capita after Competition with imported fish

18 Efforts Expansion of Direct Fishing Market More direct selling by fishermen Better control of price by fishermen. Growing Aquaculture Kindai Tuna, succeeding in the complete farming of Northern Blue Tuna, cultivating from egg to adult

trucks. Use of electric folk lifts. Conduct HACCP (Hazard analysis and critical control points).

19 Efforts Advanced Hygiene Management System: Major ports in the struck areas are adopting Advanced Hygiene Management system. Use of auto sorting machine and belt conveyer, seawater cleanup system with UV and electrolysis, complete sterilization of gloves and boots, and tire of trucks. Use of electric folk lifts. Conduct HACCP (Hazard analysis and critical control points). More preventive approach than traditional approach to maintain high hygienic level in whole production and handling processes. Whole Sale Fish Market Building Delivery Display / Sales Area Sorting Area Unloading Area Ship Quay

20 Risk Management against Tsunami Combination of breakwater and tide embankment Simulation and guideline Ground raising, relocation to high ground Auto / remote closure of water gates

21 Conclusion Tohoku EQ and Tsunami in 2011 made a big impact on Japanese fishing industry but making good progress in recovery Facing challenges New development with efforts Risk improvement measures towards Tsunami

22 I thank you for your attention! Koji Okumura Underwriter, Marine Munich Re Phone: Web: 9/25/

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