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Developing Experience-Based Premium Rate Discounts in Crop Insurance

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Author Info

  • Roderick M. Rejesus
  • Keith H. Coble
  • Thomas O. Knight
  • Yufei Jin

Abstract

This article addresses the feasibility of implementing an experience-based premium rate discount system in crop insurance. While adverse selection and moral hazard in crop insurance have been extensively studied in the past, discount systems or bonus-malus incentives have not, to our knowledge, been investigated. Our empirical analysis indicates that a crop insurance discount system could be implemented based on a measure of favorable past insurance experience. The estimated average discounts based on the rating methods developed in this study ranged from 5% to 9% (depending on the crop being considered). Copyright 2006, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.1467-8276.2006.00867.x
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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 88 (2006)
Issue (Month): 2 ()
Pages: 409-419

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Handle: RePEc:oup:ajagec:v:88:y:2006:i:2:p:409-419

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Cited by:
  1. Geoffroy Enjolras & Robert Kast & Patrick Sentis, 2009. "Diversification in Area-Yield Crop Insurance : The Multi Linear Additive Model," Working Papers 09-15, LAMETA, Universtiy of Montpellier, revised Nov 2009.
  2. Robert Kast, 2011. "Managing financial risks due to natural catastrophes," Working Papers hal-00610241, HAL.
  3. Wilson, William W. & Gustafson, Cole R. & Dahl, Bruce L., 2006. "Production Risk And Crop Insurance In Malting Barley: A Stochastic Dominance Analysis," Agribusiness & Applied Economics Report 23561, North Dakota State University, Department of Agribusiness and Applied Economics.
  4. Liang, Yan & Coble, Keith H., 2009. "A Cost Function Analysis of Crop Insurance Moral Hazard and Agricultural Chemical Use," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49485, Agricultural and Applied Economics Association.
  5. Pigeon, Mathieu & Frahan, Bruno Henry de & Denuit, Michel, 2012. "Actuarial evaluation of the EU proposed farm income stabilisation tool," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122485, European Association of Agricultural Economists.
  6. Payandeh Najafabadi, Amir T., 2010. "A new approach to the credibility formula," MPRA Paper 21587, University Library of Munich, Germany, revised 0020.

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