The Research On Optimal Bonus-malus System In Reproductive Sow Culture Insurance Of Hunan Province

During2007and2013, with42.7%increase rate per year, Chinese politicalagriculture insurance income increased from5180million to24010million, whichmade China only second to U.S.A in the world. Meanwhile, as a critical component ofpolitical agriculture insurance, political livestock insurance income shrank because ofmoral hazard, contrasted strongly with the rapid development of political agricultureinsurance. The live pig crop rate and live pig export volume of Hunan P rovinceconstantly ranks second and first respectively in recent years. As a major live pigculture province, Hunan provincial government attaches great importance to politicallivestock insurance, especially reproductive sow culture insurance which protects thebasement of live pig industry. The high moral risk in reproductive sow cultureinsurance automatically draws close attention from related departments.To settle this issue, this paper suggests that bonus-malus system should be appliedin reproductive sow culture insurance so that we can take advantage of pricingmeasures and utilize the invisible hand of market. On the basis of both domestic andforeign research, this paper refers to the experience in motor vehicle insurance,improves Xueqing Shao’s bonus-malus claim-size and claim-frequency based system,and designs four financial balanced optimal bonus-malus plans in steady state underpolicy constrain using claim data of Hunan Province from2007to2011. And then, itchooses the most effective rewards and punishments rule which tends to perform bestin practice under policy constrain after evaluating all the plans by stability index,convergence index and stringency index from actuarial respect and practical respect.Besides, constructive suggestions are provided for the appliance of optimalreproductive sow culture insurance bonus-malus system.