| Weather index insurance is a new farming risk management tools in recent years, the pilot has been widely used in developing countries. Compared to traditional agriculture insurance, the contract structure of weather index insurance can reduce adverse selection and moral hazard to a certain degree, use weather index instead of the traditional field investigation underwriting can greatly reduce operating costs, that’s the objective reason why the weather index insurance achieved periodic success. But weather index insurance’s development also face difficulties, such as basis risk, initial cost, policy regulation and so on. After introducing the weather index insurance into our country, corresponding research also begins to increase gradually, but the research about premium setting is still blank, so is the research abroad. Currently each pilot area due to the difference of product and form of the content, the premium setting method is different. Consider insurance company’s financial status in a short time. This subject starting from the basic concept of weather index insurance, making contrast analysis of the current products in the market, tries to obtain the corresponding characteristics and lessons. Then, clarify the composition of insurance basic price, from basic pricing method; choosing appropriate pure premium setting method, at last find the correction method of the corresponding pure insurance premium.The main content of this paper are as followed:The first chapter mainly explains the background, literature review and main research content etc.The second chapter mainly about the discusses of the weather index insurance’s reasons and background from two angles and stage of development; definition of weather index insurance by using related literature, study the role of the weather index insurance in agricultural risk management, finally, compare the weather derivatives and weather index insurance. In the third chapter, a general description of the existing products on the market, chooses India, Malawi as example to study products, compared to corresponding product’s features to summarize successful experience and rate, paving the way for the product determined.The fourth chapter, through analyzing the composition to weather index insurance premiums, comparing the weather index insurance and risk pricing method, and finally get the underwriter, policy-holder’s potential demand in different price environment. By build no difference model.Chapter five, divide weather index into the first class I and class II weather index by using method of claim amounts, study the two types of index insurance and set out the pure insurance cost, finally put the extreme value theory into the weather index insurance prices setting. At the end of this chapter we calculate the premium of the rice planting drought index by using the eve rainfall and high temperature of Chang Feng county data. and compared with, the actual Guo Yuan agriculture insurance price.Chapter six, correction method for pure insurance cost, mainly includes the risk value method and the Sharpe ratio method, combined with the World Bank commodity risk management group practical application in countries such as Malawi and the results of the fifth chapter. Making a rough risk correction instance.This article’s main innovation lies in:(1) this paper’s topic selection point of view, although our country has successfully introduced the weather index insurance, but the research about weather index insurance rates setting method is still blank; On the other hand, the weather index insurance has a huge potential demand, but market supply is insufficient, pricing and fees setting problem is one of the reasons for the shortage.(2) No difference model was constructed by using expected utility theory, indifference price, potential supply and demand are come form that model,(3) evaluate the existing premium setting method, build a relatively complete system of weather index insurance premium setting, from the insurance cost, to the price accept ability and the pure premium setting also, risk premium. |
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