An Actuarial Analysis of Calibration of Crop Insurance Premiums to Heterogeneous Risks

Malini, Nair (2005): An Actuarial Analysis of Calibration of Crop Insurance Premiums to Heterogeneous Risks.

Abstract

This paper examines whether the loadings on the crop insurance premium rates for risks such as moral hazard and adverse selection are adequate. From the discrete choice (tobit) analysis conducted, we discover that the premium loadings for 75% coverage level are not adequate, resulting in losses for the Risk Management Agency.

• Item Type: MPRA Paper
• Language: English
• Keywords: crop insurance, tobit modeling, moral hazard, adverse selection, premium rate, loading on premiums
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C25 - Discrete Regression and Qualitative Choice Models ; Discrete Regressors ; Proportions ; Probabilities; C - Mathematical and Quantitative Methods > C0 - General > C01 - Econometrics

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