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Private Crop Insurers and the Reinsurance Fund Allocation Decision

Author

Listed:
  • Keith H. Coble
  • Robert Dismukes
  • Joseph W. Glauber

Abstract

This research investigates the strategic behavior of private crop insurance firms reinsured by the USDA through the Standard Reinsurance Agreement. This arrangement allows the private firm to strategically allocate individual policies into different risk-sharing arrangements. Thus, firm earnings are conditioned upon accurately forecasting policy loss experience. Our analysis begins with models investigating the characteristics explaining the placement of policies into the assigned risk fund. Then a simulation model of the SRA is used to compare the post-SRA returns of actual firm allocations to two alternative allocation strategies based on a aggregate models and a policy-level econometric forecasting model. Copyright 2007, Oxford University Press.

Suggested Citation

  • Keith H. Coble & Robert Dismukes & Joseph W. Glauber, 2007. "Private Crop Insurers and the Reinsurance Fund Allocation Decision," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 582-595.
    • Handle: RePEc:oup:ajagec:v:89:y:2007:i:3:p:582-595
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.00982.x
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    Cited by:

    1. Ming Wang & Tao Ye & Peijun Shi, 2016. "Factors Affecting Farmers’ Crop Insurance Participation in China," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 479-492, September.
    2. Francis Tsiboe & Jesse Tack, 2022. "Utilizing Topographic and Soil Features to Improve Rating for Farm‐Level Insurance Products," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(1), pages 52-69, January.
    3. Park, Eunchun & Brorsen, Wade & Harri, Ardian, "undated". "Spatially Smoothed Crop Yield Density Estimation: Physical Distance vs Climate Similarity," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259145, Agricultural and Applied Economics Association.
    4. Fujin Yi & Mengfei Zhou & Yu Yvette Zhang, 2020. "Value of Incorporating ENSO Forecast in Crop Insurance Programs," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(2), pages 439-457, March.
    5. F. G. Santeramo & B. K. Goodwin & F. Adinolfi & F. Capitanio, 2016. "Farmer Participation, Entry and Exit Decisions in the Italian Crop Insurance Programme," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 639-657, September.
    6. Smith, Vincent H. & Glauber, Joseph W. & Dismukes, Robert, 2016. "Rent Dispersion in the US Agricultural Insurance Industry," IFPRI discussion papers 1532, International Food Policy Research Institute (IFPRI).
    7. Yu, Jisang & Sumner, Daniel A. & Lee, Hyunok, 2021. "Premium rates and selection in specialty crop insurance markets: Evidence from the catastrophic coverage participation," Food Policy, Elsevier, vol. 101(C).
    8. Chengguo Weng & Lysa Porth & Ken Seng Tan & Ryan Samaratunga, 2017. "Modelling the Sustainability of the Canadian Crop Insurance Program: A Reserve Fund Process Under a Public–Private Partnership Model," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(2), pages 226-246, April.
    9. Tiwari, Sweta & Coble, Keith & Harri, Ardian & Barnett, Barry, 2017. "Hedging the Price Risk of Crop Revenue Insurance Through the Options Market," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 253081, Southern Agricultural Economics Association.
    10. Delay, Nathan & Chouinard, Hayley & Walters, Cory & Wandschneider, Philip, "undated". "Examining the Role of the Crop Insurance Selling Agent," Cornhusker Economics 307133, University of Nebraska-Lincoln, Department of Agricultural Economics.
    11. Nathan D. DeLay & Hayley H. Chouinard & Cory G. Walters & Philip R. Wandschneider, 2020. "The influence of crop insurance agents on coverage choices: The role of agent competition," Agricultural Economics, International Association of Agricultural Economists, vol. 51(4), pages 623-638, July.
    12. Dylan Turner & Francis Tsiboe & Hunter Biram & Lawson Connor, 2025. "Actuarial implications of prevented planting coverage," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 47(1), pages 394-415, March.

    More about this item

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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