Study On Risk Division And Premium Determination Of Wheat Production In Henan Province

The stability of agricultural production is the basis for the development of a country’s economic and social stability. China’s rural population accounts for half the ratio, the stability of agriculture, rural areas is most paramount. The feebleness of agriculture determines it will face many risks, as the main tool to disperse the risk of agriculture, agricultural insurance gets more and more attention from the central government, the development of agricultural insurance to serve the solution of "agriculture, rural areas and farmers" are always mentioned in the first central file each year. The pilot project of agriculture insurance has been launched since 2007,the development of agriculture insurance in Henan province have a rapidly growth, however the guarantee extent of current policy-oriented agricultural insurance is too slow, and the different risk between each regions is not taken into account, moral hazard and adverse selection problems occured frequently. Compared with the current insurance products, regional production insurance can solve the problem of lack in demand and supply of the current agriculture insurance in our province perfectly.The payment of premiums and compensation standard of the current practice of policy-related agricultural insurance in Henan province is not in conformity with the exchange of value principle in the property insurance, so before conducting regional production insurance, we must divide the whole province into different areas scientific and reasonable, then set different premiums for different areas. Because of the limitation of my capacity and data, I using yield reduction rate interpretation comprehensive risk loss rate. Because the sample data is less, this article uses nonparametric information diffusion model to calculate the distribution of risk loss rate because under the small sample size it can get relatively stable estimation. On this basis, combining with the yield coefficient of variation, scale, efficiency index, pose a risk zoning, constitute five leading indicators, through clustering analysis, divided the province into high, medium and low three risk area. Finally using parameter estimation method to calculate security degree in 90%, 100% pure insurance cost.Research results show that even under 100% security, the premium rate of regional production insurance is still lower than the premium rate of the current wheat insurance, which is six percent. No matter the security degree is 90% or 100%, premium of high-risk area is more than three times of low risk area. The risk difference is very big between different wheat production areas. The wheat area yield insurance can effectively reduce the moral hazard and adverse selection problem.