Study On Adverse Selection Of Farmers’ Risk Preference In Agricultural Insurance

Agricultural insurance as one of the "green box" policies under the WTO framework, taking to scatter the agricultural risk, compensation of agricultural disaster loss and stabilize the agricultural economy as its mission, at present, most countries in the world have already used it as an important means to ensure agricultural production. Since the implementation of the policy of agricultural insurance in the Inner Mongolia Autonomous Region in 2007, the development of agricultural insurance in the autonomous region is very fast, especially the planting insurance. Farmers as the main buyers of agricultural insurance, is an important force to promote the rapid development of agricultural insurance in Inner Mongolia. Because farmers are rational economic man, the farmers towards risk there are a difference, namely farmers’subjective risk preference is heterogeneity. Different risk preferences of farmers have different behavior. In the course of the development of agricultural insurance in Inner Mongolia, the adverse selection behavior caused by information asymmetry between farmers and insurance companies, it has greatly restricted the sustainable development of agricultural insurance in Inner Mongolia. Therefore, study the different risk preferences of farmers’ adverse selection behavior problem, in order to provide feasible countermeasures which can improve the Inner Mongolia Agricultural insurance premium subsidies policy and promote the sustainable development of agricultural insurance further.The main content of this paper is the case of Inner Mongolia planting insurance, through the peasant household survey of 4 cities,15 townships in Inner Mongolia, using econometric methods to detect the farmers’ adverse selection behavior of different risk preference, The empirical results show that there are adverse selection behavior of farmers who are willing to pursue risks, and there are no adverse selection behavior in the farmers who remain neutral and risk averse. Therefore, analyzing the reasons for the risk of adverse selection behavior of farmers who pursue risks, draw the following revelation:enhancing information transparency, establishing farmers awareness of integrity, distinguishing risk, differentiating premium rate and innovating the insurance products.