Research On The Insurance Pricing Of Natural Rubber Price Index Under The "Insurance+Futures" Mode

With the further promotion of the supply-side reform of national agricultural products and the higher requirements for comprehensive poverty alleviation,the traditional price insurance is gradually difficult to meet the needs of farmers to avoid price risks.On this basis,the "insurance + futures" model began to appear on the stage.As a new type of agricultural insurance,"insurance + futures" has appeared in our country’s no.1 central document for many years,making indelible contributions to China’s winning the battle against poverty.As China’s financial derivatives market continues to enrich and develop,the "insurance + futures" model should also continue to innovate,in order to prevent farmers from returning rewards,further improve farmers’ income,and make greater contributions to the service of "agriculture,rural areas and farmers".As an agricultural product,natural rubber is widely used in agriculture,medical care,transportation,industrial construction and other industries due to its unique performance,and is also an key strategic resource concerning the national economy and quality of people’s life and national defense security.Shanghai Futures Exchange officially launched the targeted poverty alleviation work of "insurance + futures" for natural rubber in May 2017.In view of the above background,This paper first introduces the operation process of the "insurance + futures" mode,and analyzes the foreign futures price insurance mode,combined with Hainan Baisha county natural rubber "insurance + futures" typical pilot case to study the advantages and existing problems of the current futures price insurance model.Based on this,this paper improves the following two aspects in order to provide new ideas for the development of this model: the one is to takes the average spot price of natural rubber within the underwriting period as the claim settlement price,and sets the insurance guarantee levels of different positions for rubber farmers to choose flexibly.the other is to set a excess "reinsurance" for Insurance Company to increase their engagement in this project.This paper first proved that the natural rubber futures market has the price discovery function through a series of empirical tests,so the price of the corresponding monthly underlying futures contract can be taken as the target price of the price index insurance.Then,GARCH(1,1)model is set up to estimate the historical fluctuation range of spot price,and the premium is calculated by Monte Carlo simulation method using option pricing.Finally,the new and old product models are compared from the perspective of core elements and the benefits of all parties,and concluded that the —— improved products can improve the selectivity and profitability of insured farmers;the futures companies may take more risks and obtain greater profits,proving that the improved products are scientific and reasonable.Summarize the above conclusions,this paper puts forward corresponding suggestions from the three aspects of product design,futures market and government,hoping to explore more possibilities for the development of "insurance + futures" model in China.