The Design Research Of Tea Area Yield Insurance

Tea cultivation insurance is great significance that can stabilize China’s tea production and protect the basic living standards of farmers. It also can protect the stability of the output of farmers and promote the tea industry and the economic development of rural areas through transferring and dispersion of agricultural risks. But China’s tea plantations insurance start late, so far only a small part of the region and the farmers is involved in the traditional tea cultivation insurance. As the tea risk is relatively large, so that the tea cultivation insurance can’t be carried in the absence of government subsidies. The traditional tea cultivation insurance is part of the cost of insurance. When the risk of disaster occur, the insurer usually use claims manner of specific setting loss exploration, resulting in a high claims costs. In addition, due to information asymmetry caused by moral hazard and adverse selection problems, so that the insurance loss rations greatly increase. China’s traditional agricultural insurance are based on a single rate method, there is no accurate risk zoning as well as differences in rates, and the form of insurance inevitably lead to farmers’ premiums unequal to protection, so that it exacerbates moral hazard and inverse selection degree.To the problems of high claims costs, high transaction costs and the risk of moral hazard and adverse selection in our tea cultivation insurance, this paper presents the tea area yield insurance. The insurance has a significant function which defenses moral hazard and adverse selection, reduces claims and transaction costs, and also solves the problem of regional risk in agricultural insurance. This paper draws on the successful experience of the United States GRP and India NAIS plan, taking into account China’s national conditions as well as differences in agricultural products, so that the paper designs tea cultivation insurance. The main narrative is divided into two parts, the theoretical part and empirical part.In the theoretical part of this paper introduces the thesis background and significance of the study, the risk in tea plantation and the related concepts of tea area yield insurance. Then the paper discusses the design of tea area yield insurance, making sure coverage, the ratio of compensation, the security level and payment rules. Finally the paper introduces rate-making principles, the determination of insurance premium and premium adjustment method.In empirical study, the paper does statistical analysis based on16years of yield data, total of14counties in Huangshan, Anqing cities, calculates skewness and kurtosis to simply make assumptions by Counties and districts of historical data, and then the thesis determines the yield of each county’s distribution model through an intuitive graphical judgment and goodness of fit test. Then the paper determine insurance premium rate of each region in the compensation ratio of100%and a guaranteed level of100%, according to Canada’s rate adjustment methods adjust the rates.Studies have shown that the average of the adjusted net rate is8.88percent, the highest rate of Susong County, up16.74percent, the lowest rate for Huizhou, up3.56%.Rate differences of each region is very large, there seems no advantage compared to tea plantations basic insurance with the current2%, but tea basic insurance coverage is relatively narrow and the protection is not sufficient. In addition, compared to30%of the additional risk rate with traditional tea cultivation insurance, the advantages of tea area yield insurance is manifested. In the practical application of the tea area yield insurance underwriting expenses, claims costs, transaction costs and management costs will lower than traditional tea plantations insurance, at same time it will choose a relatively low security level, the rates will be lower, so that the tea area yield insurance will be easier to promote.