Measure And Test Of Crop Income Insurance Rate In China

Crop insurance mainly includes the output insurance,price insurance,income insurance and weather index insurance.Crop income insurance is helpful to improve the price mechanism of agricultural products in China,which can meet WTO's green box policy,ensure the food security and improve the level of farmers' protection.Government pays more and more attention on crop income insurance in recent years,the successful experience in America also shows that income insurance will become the mainstream form of agricultural risk management.Since the development of income insurance can not be separated from accurate and reasonable insurance pricing,this paper takes the corn in Liaoning Province as an example to measure and test the income insurance rate in China.Firstly using copula and Monte Carlo Simulation to measure the net premium of income insurance.Secondly using the expected utility theory to measure the maximum premium rate of farmers under the constant relative risk aversion(CRRA)function.Finally comparing value of net premium rate and the maximum premium rate to judge the rationality.By combing the development process and empirical results of crop income insurance at home and abroad,this paper finds that:(1)The net rate calculated by copula method is less than the maximum rate and within a reasonable range;(2)There is a weak positive correlation between the yield and price of corn in Liaoning province,and the"hedging effect”of income insurance is not obvious;(3)China's insurance pricing method is relatively simple;(4)Financial subsidy increases the maximum rate,which is conducive to the promotion of income insurance.In view of the conclusions,the following suggestions are put forward in this paper:(1)The perfection of database should be paid attention to ensure the accuracy of copula pricing;(2)The marketization of crop price mechanism should be promoted to achieve"hedging effect";(3)Continue to refine and innovate insurance pricing methods;(4)A more flexible government support system should be established.