Remote Sensing Application in Pure Premium Rate-Making of Winter Wheat Crop Insurance

Weijia Wang, Wen Wang (), Kun Wang, Yanyun Zhao and Ran Yu
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Weijia Wang: Center for Spatial Information, School of Environment and Natural Resources, Renmin University of China, Beijing 100872, China
Wen Wang: Center for Spatial Information, School of Environment and Natural Resources, Renmin University of China, Beijing 100872, China
Kun Wang: Center for Spatial Information, School of Environment and Natural Resources, Renmin University of China, Beijing 100872, China
Yanyun Zhao: School of Statistics, Renmin University of China, Beijing 100872, China
Ran Yu: Center for Spatial Information, School of Environment and Natural Resources, Renmin University of China, Beijing 100872, China

Sustainability, 2023, vol. 15, issue 9, 1-15

Abstract: Crop insurance is a crucial way to avoid disaster losses and to guarantee farmers’ basic production income in China and abroad. Securing agricultural production is a critical way to eradicate hunger and reduce poverty and an essential means to achieve the UN Sustainable Development Goals. How to pay out more quickly and fairly after a disaster has become an urgent issue for agricultural insurance. The standard domestic crop insurance rate is determined based on the statistical data of the entire administrative unit and ignores the spatial risk difference of disasters inside the administrative unit. Therefore, obtaining a pure premium based on crops inside the administrative unit is a key problem. Based on remote sensing data and insurance actuarial models, we studied and determined the fair premium rates to insure winter wheat at the farmer level in Heze, Shandong, China. Our study shows that remote sensing data can provide data security for determining a pure premium rate at the level of individual farms, and provide the primary reference for determining farmer-level crop insurance premium rates. The use of remote sensing for determining those rates can improve the customization of crop insurance and reduce farmers’ lower incomes due to exposure to natural disasters, improve farmers’ resilience to risk, and prevent a return to poverty due to disasters, ultimately reaching the UN Sustainable Development goals of eradicating hunger and reducing poverty.

Keywords: UN sustainable development goals; crop insurance; premium rate; remote sensing; winter wheat (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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