The Pricing Mechanism Of Agricultural Drought Disaster Reinsurance In China

Over the implementation of the policy agricultural insurance, the agricultural insuranceget onto a new level. It is only the Anhui Agricultural Insurance Company that accepts thedrought disaster. What does this happen? If the drought disaster came into true, thedrought-hit farmland would be very wide, if the drought continued, most of the crops werecrops. In this condition, there would be amounts of payments that the insurance companycannot afford. Therefore, we need reasonable instruments--the Reinsurance of AgriculturalDrought Disaster.Excess of Loss Reinsurance can be used in our country. After comparing three kinds ofpricing methods: Burning Cost Method, Exposure Rating Method and Pareto Method, I amgoing to choose the Exposure Rating Method. In the end of the analysis，it also gives theamount of payments the insurance company should paid under a certain retention.