Chile is the second largest salmon producer after Norway. Last year it exported USD$4.5bn of farmed salmon on 800,000 tonnes of shipments. Most of the farms are in ocean enclosures or estuaries.

The risks inherent to the aquaculture industry have impacted many Chilean (re)insureds this year, and have been compounded by the effects of El Niño in Latin America (on which DACB has previously reported). El Niño leads to 2ºC - 4ºC above average sea temperatures in the west Pacific Ocean. In turn run-off from local livestock creates concentrations of nitrogen that, when mixed with the above-normal temperatures, create the ideal scenario for micro algae to grow. The harmful algae bloom (HAB) is also known as brown or red tide. The HAB in Chile has produced losses this year of around 100,000 tonnes of fish stock, reportedly worth USD$800m.

Chilean salmon farmers are also facing new legislative measures to cope with P. salmonis (SRS), a bacteria. SRS causes lesions, haemorrhaging and swollen kidneys and spleens in the salmon, and can ultimately lead to death. It is reported that Chilean farmers have used ever-increasing amounts of antibiotics to try and keep their stocks healthy. In June 2016 Chile's aquaculture regulator, Sernapesca, was ordered by the Court of Appeal to reveal the use of antibiotics in 2014.

Earlier this year Sernapesca implemented adjustments on rules to determine salmon farming densities and to limit production depending on mortalities. The new rules will permit production growth only when health and environmental conditions allow it (a warning system is being developed for this purpose). Previously the industry's harvest projections were heavily influenced by international prices, though perhaps without fully appreciating the health or environmental effects that significant growth in harvests could cause. Against this background, Sernapesca is developing regulations for the treatment and final disposal of waste for the entire aquaculture production chain, and farms will be required to update their contingency plans with concrete measures associated with extraction, treatment and final disposal of mortalities.

Reportedly the industry is currently entering a high risk level for HAB, the algae having remained in the sediments in the form of cysts. The HAB events in February/March 2016 expanded the area of distribution of these resistant cysts.