Hostname: page-component-cd9895bd7-jn8rn Total loading time: 0 Render date: 2024-12-25T18:16:17.235Z Has data issue: false hasContentIssue false
  • English
  • Français

Estimating Crop Yield Insurance Premium Rates

Published online by Cambridge University Press:  10 May 2017

Daniel J. Dudek  and
P. Geoffrey Allen
Daniel J. Dudek
Affiliation:
Department of Agricultural and Resource Economics, University of Massachusetts, Amherst
P. Geoffrey Allen
Affiliation:
Department of Agricultural and Resource Economics, University of Massachusetts, Amherst
Get access

Abstract

Insurance rates for crop yield protection programs have traditionally been calculated from county average yields. Where grower acreages and yields are not homogeneous, this approach leads to higher premiums and payouts and greater incidence of adverse selection. With individual grower data a production weighted rate premium calculation method can be used which avoids these problems. Furthermore, the definition of rate classes is not constrained to county boundaries. The additional complication of technical change is addressed and one solution is provided. Results are presented for the cranberry industry.

Type
Articles
Information
Journal of the Northeastern Agricultural Economics Council , Volume 13 , Issue 1 , April 1984 , pp. 119 - 127
Copyright
Copyright © Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The research reported in this paper was supported by both the Farm Management Branch, Extension Service and by the Federal Crop Insurance Corporation of USDA. We also wish to acknowledge the contributions of Bernard J. Morzuch and the anonymous reviewers. Computational assistance was provided by John Coyle and Christy Dudek. As usual, the authors are solely responsible for any errors or omissions.

References

Botts, Ralph R. and Boles, James N., “Use of Normal Curve Theory in Crop Insurance Ratemaking,” Journal of Farm Economics, XL(August 1958): 733–40.Google Scholar
Halcrow, Harold G., “Actuarial Structures for Crop Insurance,” Journal of Farm Economics, XXXI(August 1949): 418–43.Google Scholar
U.S. Department of Agriculture, Farm Income Protection Insurance: A Report to the United States Congress, Farm Income Protection Task Force, (June 1983).Google Scholar
U.S. Government Accounting Office, Analysis of Certain Operations of the Federal Crop Insurance Corporation, CED-81-148 (July, 1981).Google Scholar
Weisberg, Herbert I. and Tomberlin, Thomas J., “A Statistical Perspective on Actuarial Methods for Estimating Pure Premiums from Cross-Classified Data,” The Journal of Risk and Insurance, XLIX(December 1982): 539–63.Google Scholar
Yeh, Martin H. and Wu, Roland Y., “Premium Ratemaking in an All Risk Crop Insurance Program,” Journal of Farm Economics, 48 (December 1966): 1580–86.Google Scholar