Abstract
Agricultural insurance in China has in recent years been skyrocketing. However, the catastrophic risk management system is relatively lagging behind in China hence affecting the sustainable development of Chinese agricultural insurance program. Chinese government especially provincial governments are trying to develop a mechanism to stabilize crop insurance program by sharing some risk with insurer when CAT events happen. But the critical issue which is to layer the risk responsibility between insurer and local government is still unsolved. Therefore, this paper aims to provide a quantitative methodology of estimating the optimal risk sharing ratio between insurer and provincial government from the government perspective adopting the approaches in actuarial sciences, such as Copula, Monte Carlo and stochastic. After a robust empirical study, it is found that the optimal risk sharing ratio is 210 % in the case of taking account of non-accumulative loss ratio and 130 % in the case of taking account of accumulative loss ratio of insurer. It is believed that this paper has significant implications for China to set up crop reinsurance system because we proposed a suitable methodology to identify the responsibility of government and insurers in crop insurance.
The former three authors are assistant professor, master student and professor respectively at Agricultural Information Institute of CAAS. Dr. Zhou is an associate prof. at CIAS of CUFE. Authors can be available atwangkeable@gmail.com, charlieme@163.com, zhangqiao@caas.cn, and zhouxh@cufe-ins.sinanet.com.
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Notes
- 1.
2010 Asia-Pacific international symposium on agricultural insurance and reinsurance.
- 2.
In fact, there is more than one agricultural insurance company to undertake the crop insurance business in Jilin although more than 90Â % market are taken by Anhua Agricultural Insurance Co.
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Wang, K., Huo, R., Zhang, Q., Zhou, X. (2014). Study on Optimal Risk Sharing Issue for Chinese Crop Insurance: A Case Study from Government Perspective. In: Xu, S. (eds) Proceedings of 2013 World Agricultural Outlook Conference. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54389-0_16
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DOI: https://doi.org/10.1007/978-3-642-54389-0_16
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