DEVELOPING EXPERIENCE-BASED PREMIUM RATE DISCOUNTS IN CROP INSURANCE

Date

2006-05

Authors

Jin, Yufei
Knight, Thomas
Coble, Keith
Rejesus, Roderick

Journal Title

Journal ISSN

Volume Title

Publisher

American Journal of Agricultural Economics

Abstract

TIlis article addresses the feasibility of implementing an experience-based premium nlte discount system in crop insurance. While adverse selection and moral hazllrd in crop insurnnce 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 insurunce discount system could be implemented based on a measure of favorable past insunmce experience. TIle estimated average discounts based on the rating methods developed in this study ranged from 5% to 9% (depending on the crop being considered).

Description

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Citation

Rejesus, R., K. Coble, T. Knight, Y. Jin. "Developing Experience-Based Premium Rate Discounts in Crop Insurance." American Journal of Agricultural Economics, 88 (2, May 2006): 409-419.