China's insurance market is developing fast, with policies covering life, cars, property, pets and - hairy crabs. Mainland crab farmers can now insure the crustaceans to protect a business worth an estimated 450 million yuan (HK$565 million) a year. This month, Swiss Reinsurance teamed up with mainland insurer China Pacific Insurance to introduce hairy crab insurance for the 3,000 farmers who face the possibility of hot weather killing off the multi-legged creatures. The policy would pay the farmer if temperatures stay above 37.5 degrees Celsius for three consecutive days in the summer. [Crabs] can be easily killed … In any summer that hits 33 degrees or above, many crabs will die CHEUNG WING-KAI, RESTAURATEUR Originally popular only with Shanghainese, hairy crabs are now considered a delicacy nationwide, and many Japanese tourists come to Hong Kong to enjoy them. Hongkongers alone eat 500,000 to 600,000 of the crabs each year, and the figures nationwide would be in the millions. While October is hairy crab season at restaurants, the insurance policy covers the summertime, when the crabs are reaching maturity. Last year, Jiangsu province, surrounding Shanghai, had extremely hot weather. Temperatures that hit 40 degrees killed many of the crabs, leading to huge losses for farmers. Yuanyong Long, vice-president of Swiss Re Corporate Solutions, told the South China Morning Post that hairy crab insurance would be a good risk management tool for farmers. "On the one hand, we saw losses, sometimes big losses, resulting from adverse weather conditions," Long said. "On the other hand, the evolution of corporate governance requires that senior executives proactively analyse and manage the exposures of their companies, including weather exposure. "In some industries, such as energy and agriculture, weather exposure is one of the biggest exposures." Long said farmers can choose to buy one-year, two-year or three-year coverage for the summer period. In 2002, the World Bank's Commodity Risk Management Group allocated trust funds from the Swiss and the Dutch governments to devise weather insurance for farmers of developing countries against the risks of temperatures and rainfall hurting the harvests for their major agricultural products. India, Thailand, Ukraine and other countries have similar weather insurance products. Long said Swiss Re now covers only hairy crabs, but he is optimistic about the prospects for weather-related insurance. "With the increase in large-scale farming in China, weather exposure will become more concentrated, hence the demand for weather insurance will increase. By limiting weather exposure, farmers and agricultural firms can have better access to external financing," he said. "In the past, when people were not aware of weather solutions, weather exposure was perceived as something that couldn't be managed, and thus nobody would be held accountable. Now, with the availability of weather solutions, senior executives might find themselves better off transferring part of their weather risks." Cheung Wing-kai, manager of the Hong Kong Lao Shanghai Restaurant, one of the city's most popular crab restaurants, said Hong Kong customers had to pay 10 per cent more for hairy crabs last year because the hot summer reduced the supply. The wholesale price of hairy crabs last year jumped to HK$8,000 for 12.5kg from HK$6,000. "The hairy crabs can survive very cold weather, but they can be easily killed by hot weather. In any summer that hits 33 degrees or above, many crabs will die," Cheung said. He said farmers will start harvesting the crabs from September 20 this year. "This year's summer is not yet over, so we do not know the situation yet," Cheung said. "Even if farmers have insurance cover to cover their financial losses, the policy would not cover the price to be paid by the customers. If the summer is very hot, supply will fall, and the sales price will still be high."