Design Of Rice Income Insurance Products In Hunan Province

Rice is one of China's main crops,and it feeds almost half of the country's population.As a traditional agricultural province,Hunan is one of the most important area in terms of rice production in China.The development level of the rice industry in Hunan not only has a direct effect on the economic development of rural areas,but also has extremely important practical significance for the dietary nutrition and the country 's food security.However,it is generally confronted with both natural risks and market risks in the process of rice production and management.The fluctuations on the rice yield and price have seriously dampened the enthusiasm of the farmers,thereby endangering the stability of the rice industry.The traditional insurance tool that guarantees the stability of rice production is yield insurance.However,yield insurance cannot meet the needs of the current development of the rice industry.Low degree of protection is one of the reasons,but more importantly,yield insurance cannot solve the problem of income loss caused by price fluctuations in the rice market due to its own functional positioning and liability limitations.As an important insurance innovation mechanism,income insurance is able to cover the loss from both yield reduction caused by natural disasters as well as the unfavorable price fluctuations caused by market risks.Therefore,it could comprehensively prevent the income loss from both natural and market risks.Moreover,many recent government policies like China 's Central Document No.1 strongly support the development of income insurance on rice.Based on this,this article conducts product design for three varieties of rice in Hunan province.We believe such a income insurance design could promote the development of the rice industry and modern agriculture in Hunan,provide other rice production areas with certain experience,and enrich China's agricultural insurance system to a certain degree.This article first sorts out the theoretical basis of rice income insurance.After the analysis of the necessity and feasibility of the rice income insurance in Hunan province,this paper learns from the successful experience of the crop income insurance in the United States in terms of the product design and the subsidy mechanism,which provides theoretical and practical supports for the product design and product promotion of rice income insurance in Hunan province.The prime part of the paper is the product design of rice income insurance in Hunan province.Focus on the design framework of rice income insurance,the article clarifies the income insurance elements including insurance subject and insurance liability,time and period of insurance,insurance amount and actual income,compensation criteria and insurance rate.The insurance amount of the early rice,medium rice and late rice income insurance is set to cover planting costs,labor costs,land costs and reasonable benefits.In terms of rate calculation,the statistical software Eviews8.0 is utilized to process the yield and price data of early rice,medium rice and late rice.Software Easyfit5.4 is used to run K-S test on these processed data to determine the optimal marginal distribution on both yield and price of early rice,medium rice and late rice.The Copula function is involved to determine the optimal joint distribution of early rice,medium rice and late rice.Eventually,the Monte Carlo simulation helps to simulate the sample value of income,which is substituted into the insurance pricing formula to calculate the pure and gross rates of income insurance for early rice,medium rice and late rice in Hunan province.After completing the design of rice income insurance products in Hunan province,this paper puts forward suggestions for the possible difficulties in the promotion of rice income insurance product in Hunan province.There are four reasons could cause the difficulties.The first one is that the imperfect database makes the product rate deviation;the second reason is that imperfect futures market affects the function of rice income insurance;another reason is the possible pressure on popularizing of rice income insurance product;the last one is farmers have insufficient awareness of rice income insurance.It is recommended to build a complete rice income reduction database and futures market,further improve the financial subsidy mechanism for rice income insurance,and optimize rice income insurance services.