An Actuarial Analysis of Calibration of Crop Insurance Premiums to Heterogeneous Risks
This paper examines whether the loadings on the crop insurance premium rates for risks such as moral hazard and adverse selection are adequate. From the discrete choice (tobit) analysis conducted, we discover that the premium loadings for 75% coverage level are not adequate, resulting in losses for the Risk Management Agency.
D81 - Criteria for Decision-Making under Risk and Uncertainty, G22 - Insurance; Insurance Companies, C25 - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions, C01 - Econometrics
DOI identifier: 10.2139/ssrn.2001451