Copula Theory And Its Application In Agricultural Insurance

Firstly,this paper introduces the theory of Copula function.It mainly includes the concept and its basic nature,related measure,parameter estimation method and the corresponding test methods.The parameter estimation method of Copula model include maximum likelihood estimation method,the two-stage maximum likelihood estimation and nonparametric estimation method.The correlation test can be divided into geometry test method,K-S test method and the experience of Copula minimum distance.In this paper,we focus on the classification of the Archimedean Copula function family and its tail correlation.In this paper,we use the correlation of Copula function to analyze the insurance premiums of agricultural,analysis of various factors that affect the premiums.This paper selected the data of 1990-2014,agricultural insurance premium income,per capita income of rural residents,inundated crops last year accounted for the proportion affected,the annual agricultural insurance loss ratios,financial subsidies of agricultural insurance.Through the analysis by Archimedean Copula function family,in Copula model parameter estimation,we mainly use non-parametric estimation method.And select the best function Gumbel Copula function through geometry test and Kolmogorov-Smirnov test.With Gumbel Copula function to the tail correlation analysis we get the per capita income of rural residents,agricultural insurance subsidies with the tail correlation coefficient of agricultural insurance premiums.The results obtained by the Copula model have consistent results that commonly used multiple linear regression method,but the results of Copula model will be more efficient and accurate.This shows Copula model has a wide application in the financial analysis.