Design Of Weather Index Crop Insurance Contract For Northeast China

As an important financial tool, agricultural insurance plays a great role in the development of agriculture and the income of farmers in western countries. However, the development of Chinese agricultural insurance is lagging behind. Agricultural insurance companies lose money seriously, which doesn't match the role of the agricultural insurance in economy. One of the reasons is that the traditional insurance doesn't suit the agricultural output model. In such a context, this paper puts forward a new kind of agricultural insurance, weather index agricultural insurance, to solve China's agricultural insurance problems faced at this stage.Since 2002, the World Bank's commodity risk management organization (CRMG) has been promoting weather index insurance in developing countries. After the first trial in 2003 in India, many developing countries such as Mexico were related to the pilot . Weather index insurance plays an important role in farmers'risk management.China introduced weather index of agricultural insurance in 2007.The Chinese Ministry of Agriculture, IFAD and the United Nations World Food Programme discussed the cooperation in the weather index for rural agricultural insurance in vulnerable areas in June 2007. In the end of 2007, Anhui Province was identified as the pilot province of weather index agricultural insurance. Under the guidance of Chinese and foreign experts, Guoyuan Insurance Company designs a sample of rice planting weather index agricultural insurance based on Changfeng County, and was recorded by China Insurance Regulatory Commission on May 25, 2009. The insurance has been issued to farmers in Changfeng County. This is so far the only climate index Agricultural Insurance in ChinaInspired by existed research results, this paper uses the panel data model to design a weather index crop insurance contract in Northeast. This paper utilizes data of 27 cities of Heilongjiang and Liaoning provinces in the recent 13 years, according to temperature, precipitation and sunshine indicators, to design a specific weather index crop insurance for Northeast China, which could be considered as an innovation in the field, in order to provide a reference for following research and practice of weather index agricultural insurance market of China.