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Index based crop insurance product design and ratemaking : the case of modified NAIS in India

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  • Clarke,Daniel Jonathan
  • Mahul,Olivier
  • Verma,Niraj

Abstract

Designing and rating insurance products requires both science and judgment. In developing and emerging economies, actuarial procedures must be robust and implementable, as well as offering a sufficient degree of transparency and flexibility so as to allow expert judgment to be incorporated. This paper outlines an approach to designing and rating a portfolio of index insurance products that uses both temporal and spatial aspects of the data to increase the efficiency of statistical estimates. The approach has formed the basis for the design and ratemaking methodology implemented by the Agriculture Insurance Company of India for the modified National Agricultural Insurance Scheme, which was initiated by the Government of India in late 2010.

Suggested Citation

  • Clarke,Daniel Jonathan & Mahul,Olivier & Verma,Niraj, 2012. "Index based crop insurance product design and ratemaking : the case of modified NAIS in India," Policy Research Working Paper Series 5986, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5986
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    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/07/10/090224b0828cadc9/1_0/Rendered/PDF/Index0based0cr0dified0NAIS0in0India.pdf
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    References listed on IDEAS

    as
    1. Jerry R. Skees & J. Roy Black & Barry J. Barnett, 1997. "Designing and Rating an Area Yield Crop Insurance Contract," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 430-438.
    2. Clarke,Daniel Jonathan & Mahul,Olivier & Verma,Niraj, 2012. "Improving farmers'access to agricultural insurance in India," Policy Research Working Paper Series 5987, The World Bank.
    3. World Bank, 2011. "Enhancing Crop Insurance in India," World Bank Other Operational Studies 2748, The World Bank.
    4. Clarke, Daniel & Mahul, Olivier, 2011. "Disaster risk financing and contingent credit : a dynamic analysis," Policy Research Working Paper Series 5693, The World Bank.
    5. Stephens M. Stohs & Jeffrey T. LaFrance, 2004. "A learning rule for inferring local distributions over space and time," Monash Economics Working Papers archive-29, Monash University, Department of Economics.
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    Cited by:

    1. Gaurav, Sarthak, 2015. "Are Rainfed Agricultural Households Insured? Evidence from Five Villages in Vidarbha, India," World Development, Elsevier, vol. 66(C), pages 719-736.
    2. Sommarat Chantarat, 2015. "Index-based Risk Financing and Development of Natural Disaster Insurance Programs in Developing Countries," PIER Discussion Papers 10., Puey Ungphakorn Institute for Economic Research, revised Nov 2015.
    3. Michler, Jeffrey D. & Viens, Frederi & Shively, Gerald, 2015. "Risk, Agricultural Production, and Weahter Index Insurance in Village South Asia," 2015 Conference, August 9-14, 2015, Milan, Italy 212460, International Association of Agricultural Economists.
    4. Clarke,Daniel Jonathan & Mahul,Olivier & Rao,Kolli Nageswara & Verma,Niraj, 2012. "Weather based crop insurance in India," Policy Research Working Paper Series 5985, The World Bank.
    5. Biener, Christian, 2013. "Pricing in Microinsurance Markets," World Development, Elsevier, vol. 41(C), pages 132-144.
    6. Clarke,Daniel Jonathan & Mahul,Olivier & Verma,Niraj, 2012. "Improving farmers'access to agricultural insurance in India," Policy Research Working Paper Series 5987, The World Bank.
    7. World Bank, 2011. "Enhancing Crop Insurance in India," World Bank Other Operational Studies 2748, The World Bank.

    More about this item

    Keywords

    Bankruptcy and Resolution of Financial Distress; Hazard Risk Management; Insurance&Risk Mitigation; Debt Markets; Emerging Markets;

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