EVALUATION OF CROP INSURANCE PREMIUM RATES FOR GEORGIA AND SOUTH CAROLINA PEACHES

Abstract

We estimate actuarially fair premium rates for yield insurance for Georgia and South Carolina peaches for comparison to the premium rates established by the Risk Management Agency (RMA) for the 1999 crop. The RMA premium rates varied from county to county, but were identical for all growers in a given county. The estimated premium rates decrease with the grower's expected yield. The RMA rate structure encouraged adverse selection, as premium rates were too low for growers with low expected yields (especially at low coverage levels) and were too high for growers with high expected yields (especially at high coverage levels).adverse selection, crop insurance, peaches, premium rate, yield guarantee, Risk and Uncertainty,