A bootstrap approach for pricing crop yield insurance

文献类型： 外文期刊

第一作者： Xiao, Yugu

作者： Xiao, Yugu;Wang, Ke;Porth, Lysa

作者机构：

关键词： Crop insurance;Bootstrap confidence interval;Coverage probability;Premium rate

期刊名称：CHINA AGRICULTURAL ECONOMIC REVIEW （ 影响因子：2.239； 五年影响因子：2.048 ）

ISSN： 1756-137X

年卷期： 2017 年 9 卷 2 期

页码：

收录情况： SCI

摘要： Purpose - While crop insurance ratemaking has been studied for many decades, it is still faced with many challenges. Crop insurance premium rates (PRs) are traditionally determined only by point estimation, and this approach may lead to uncertainty because it is sensitive to the underwriter's assumptions regarding the trend, yield distribution, and other issues such as data scarcity and credibility. Thus, the purpose of this paper is to obtain the interval estimate for the PR, which can provide additional information about the accuracy of the point estimate. Design/methodology/approach - A bootstrap method based on the loss cost ratio ratemaking approach is proposed. Using Monte Carlo experiments, the performance of this method is tested against several popular methods. To measure the efficiency of the confidence interval (CI) estimators, the actual coverage probabilities and the average widths of these intervals are calculated. Findings - The proposed method is shown to be as efficient as the non-parametric kernel method, and has the features of flexibility and robustness, and can provide insight for underwriters regarding uncertainty based on the width of the CI. Originality/value - Comprehensive comparisons are conducted to show the advantage and the efficiency of the proposed method. In addition, a significant empirical example is given to show how to use the CIs to support ratemaking.

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