Agricultural Prices Impact On Moral Hazard Of Agricultural Insurance

Under the conditions of market economy,agricultural insurance is an institutional arrangement that transfer and diversify risk of Agriculture,stable agricultural production and farmers' income.Policy agricultural insurance is an important policy tool for countries to support the "three rural" development,that is also one of the "green box" policy that international trade allowed to support the export of agricultural products.In recent years,Policy-oriented agricultural insurance in China have a rapid development,and the coverage also substantial increase.However,due to the special nature of agricultural production,the insured serious information asymmetry between the farmers and the insurance companies on agricultural production,due to this condition bring about the farmers adverse selection and moral hazard,loss of agricultural insurance is artificially expanded,increased systemthe operating costs.these reasons become a prominent issue to interfere with the running of agricultural insurance which is particularly evident in the early stages of the development of agricultural insurance.These are many factors bring in Moral hazard and adverse selection,such as an unreasonable pricing mechanism of insurance contract,the imperfect risk management measures of the insurance company's,the identification of agricultural losses in the relevant departments are not objective and so on.These factors have been the concern of the insurance industry and government departments,and set about to improve.However,while these static factors are concerning,we tend to ignore the impact of price changes in agricultural products market factors on agricultural insurance moral hazard.In Practice,this phenomena is observed in pigs insurance and other varieties,but have no seriously research and feasibility studies.The writer believe that,today the agricultural products become market-oriented,price fluctuations have become increasingly frequent,in the future the agricultural production will become modernization,the level of agricultural insurance protection will increase.Research on the impact of agricultural prices of agricultural insurance moral hazard is extremely important.This is not only to improve the need of the theoretical study of agricultural insurance,but also to ensure that agricultural insurance in China to adapt to the needs of agricultural production,to maintain long-term sustainable and efficient development needs.In this paper,based on the classic insurance econometric model,from the context of static equilibrium of farmers utility maximization,build a theoretical analysis framework of farmers kinds of behavior for shared decision-making,investigated the condition that under conditions of uncertainty,how the farmers carry out a variety of decisions at the same time.Such decisions include the production factors between the insured and moral hazard behavior,and these decisions is how to interact.Use this model to discuss the simple cases and complex situation,divided premium rate into a fair rate for non-fair rate,fully insured with the proportion insured,there is the risk of moral hazard and there is no moral hazard situations and so on,examines the optimal decisions of farmers under different conditions,and focusing on the impact of variable prices of agricultural products for adverse selection and moral hazard.Theoretical analysis shows that:As a barometer of the market of agricultural products,agricultural prices not only reflect the current market supply and demand of agricultural products,and will affect future production behavior of the farmers;In the case of farmers to buy agricultural insurance,this will also affect the probability and extent of moral hazard.Specifically,first,farmers' optimal factor inputs in production is a monotonically increasing function of the prices of agricultural products,that is,the higher the market prices of agricultural products,the higher he farmers production inputs enthusiasm.;farmers' optimal factor inputs in production is a decreasing function of the probability of loss occurrence,the higher the probability of loss,the lower the farmers production inputs enthusiasm.Second,when the premium is higher than the fair premium(contains additional rate),the farmers will select the partly insured.When government give some subsidies for agricultural insurance,the enthusiasm of farmers insured and insured proportion will improve.When the premium rate is lower than the fair premium,farmers exist a tendency to over-insured.Insured proportion have a negatively correlated with factor inputs,prices of agricultural products,that is the smaller the amount of factor inputs,the lower the prices of agricultural products,the higher the proportion of the insured.Third,in terms of income insurance(insurance amount is equal to the market price of agricultural products)or the cost of insurance(insurance amount is equal to the actual cost of agricultural products or a certain percentage),the higher the productivity of farmers,the greater normal production gains;Thus the lower the probability of occur moral hazard,that is the higher the input-output ratio,the higher the prices of agricultural products,the lower the probability of loss,the lower the probability of occur moral hazard.Due to characteristics of agricultural production in Beijing,such as:having preliminary characteristics of modern agriculture,the policy-oriented agricultural insurance offered the earlier time,the foll range of aquaculture species Insurance,wide coverage,financial support,improve the system of government,with the typical features of a policy-oriented agricultural insurance,therefore,the writer selects the data of agricultural production and insurance of wheat,corm,pigs and cows in 2007-2012,through partition obtain panel data,establish empirical test model,verify and analyze the above conclusion.From the Empirical Analysis Conclusion view,the prices of agricultural products would produce a positive impact to the farmers produce behavior,that is,the higher the prices of agricultural products,the higher the farmers' enthusiasm for production,the greater the amount of factor inputs,thus the higher the yield of agricultural products,which have a direct performance in farming,but there is a certain lag effect in aquaculture.The prices of agricultural products have a negative impact on the loss ratio,that is,the higher the prices of agricultural products,the lower the loss ratio;It is indicated that the smaller the probability to occur moral hazard,which reflected both in farming and aquaculture insurance field,especially for large rigid demand species.The result of Beijing policy-oriented agricultural insurance reveal the national trend to some certain extent,policy formulation and implementation should be given some concern of agricultural insurance.The one hand,should be proactive to suppression the cost of moral hazard due to price fluctuations,avoid the risk of prices fluctuations in agricultural products are passed on to agricultural insurance claims,thereby distorting agricultural insurance operations,reducing the efficiency of financial capital;The other hand,we should improve the agricultural insurance system,design flexibility insurance amount against price fluctuations insurance products,strict restraint mechanisms of insurance contracts,appropriate increase the operating expenses subsidies of insurance company to strengthen the moral hazard precautions and so on.