Developing Experience-Based Premium Rate Discounts in Crop Insurance

Roderick Rejesus, Keith Coble, Thomas O. Knight and Yufei Jin

American Journal of Agricultural Economics, 2006, vol. 88, issue 2, 409-419

Abstract: This article addresses the feasibility of implementing an experience-based premium rate discount system in crop insurance. While adverse selection and moral hazard in crop insurance have been extensively studied in the past, discount systems or bonus-malus incentives have not, to our knowledge, been investigated. Our empirical analysis indicates that a crop insurance discount system could be implemented based on a measure of favorable past insurance experience. The estimated average discounts based on the rating methods developed in this study ranged from 5% to 9% (depending on the crop being considered). Copyright 2006, Oxford University Press.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:88:y:2006:i:2:p:409-419

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