Developing Experience-Based Premium Rate Discounts in Crop Insurance
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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Volume (Year): 88 (2006)
Issue (Month): 2 ()
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