Agricultural Insurance Market Research Articles

ІННОВАЦІЙНІ ПІДХОДИ ДО ВИКОРИСТАННЯ ПОТЕНЦІАЛУ АГРОСТРАХУВАННЯ

Highly profitable activities of insurance companies in the future, ie from the standpoint of short-term and long-term time frame, provides for the formation of a favorable insurance environment in which the interests of all key players in the agricultural insurance market will be taken into account and protected. In this context, it is important to introduce innovative developments in the field of insurance services to the agricultural sector of the economy. As a result, this study aims to form a conceptual approach to the formation of agricultural insurance relations based on innovative approaches to using the potential of agricultural insurance, based on the feasibility and need to involve IT technologies in the insurance system of the agricultural sector; building interaction between structural elements of the market on the basis of quality management as a basis for ensuring the competitiveness of insurance services in the agricultural insurance market and the emphasis on reengineering in agricultural insurance. signs will surpass their counterparts. Ensuring the competitiveness of the insurance service depends on the level of satisfaction of policyholders in the received insurance coverage. Innovation in insurance services is manifested in the expansion of services with risky components; development of specific service packages for different groups of agricultural producers (in particular, small, medium and large). According to the results of the study, modern approaches to the formation of an effective insurance system in the agricultural sector of Ukraine are identified, the key of which are: improving the system of intermediary services in the agricultural market to strengthen the interaction of insurance companies with infrastructure entities mediation through the involvement of the latter in the mechanism of insurance services and in order to increase the coverage of insurance protection of agricultural producers; expanding the horizons of cooperation between companies working in the field of insurance protection of agricultural producers and companies providing the latter in the sale of insurance products, which cover the crop segment; establishing an active and lasting dialogue between participants of the insurance process, which is based on the principle of customer-oriented approach, based on which it is advisable to integrate the interests of a particular agricultural producer, related to the need for insurance protection. the need to attract IT technologies to the insurance system of the agricultural sector of the economy. Conceptual approaches to the formation of agro-insurance relations on the basis of innovative directions of using the potential of agro-insurance are reflected, which provide for the need to involve IT technologies in the system of insurance protection of the agricultural sector of the economy; building interaction between the structural elements of the market on the basis of quality management as a basis for ensuring the competitiveness of insurance services in the agricultural insurance market, and emphasizing reengineering in agricultural insurance.

Архітектоніка комплексної модернізації агрострахового ринку України в умовах трансформаційних процесів

Creating a strong agricultural insurance market in Ukraine as an effective resource and tool to strengthen the agricultural sector of the economy from the standpoint of minimizing risks affecting the profitability of production is one of the key stages in the development of the Ukrainian insurance system in the agricultural sector. However, the Ukrainian agricultural insurance market is still in its infanthood and is developing unsystematically, without a clearly defined development strategy and proper state support. The purpose of the article is to develop proposals for the architecture of complex modernization of the Ukrainian agricultural insurance market in terms of transformation processes with vector interpretation of its development. The architectonics of complex modernization of the Ukrainian agricultural insurance market in the conditions of transformation processes is offered and the expediency of its strategizing in the context of five key vectors is proved, which, in turn, compose a vector set of directions of strategic character. The author's vision of strategic vectors of complex modernization of the agricultural insurance market of Ukraine is focused on: format outlines of the market (key forms of its further development), compositional structural framework of the market (formatting within the sectoral configuration taking into account the peculiarities of each of the three sectors); in terms of formal – legal norms and rules of insurance and informal restrictions – ethical and cultural norms), innovation of agricultural insuranceactivities (new approaches to the use of agricultural insurance potential) and agricultural insurance environment (insurance environment in the agricultural sector of the economy). According to the key provisions of the strategy of development of the agricultural insurance market of Ukraine, a logical and functional approach to the architecture of modernization of the Ukrainian agricultural insurance market in the conditions of transformation processes based on the principles: efficiency, tolerance, modernity, innovation, strategizing, transparency, clientele, customer orientation format. The study contains theoretical and practical provisions that form the basis for sustainable and dynamic development of the local agricultural insurance market in terms of transformation processes.

Страховий захист агровиробників України: огляд страхових компаній і продуктів

The article is aimed at analyzing the work of insurance companies in the agricultural insurance market, evaluating their services for insurance protection of agricultural producers and studying the State’s efforts in supporting farmers in the sphere of agricultural insurance. In the course of the study, it is defined that the current system of agricultural insurance is unsatisfactory, and every year regressive processes are observed in the agricultural insurance market. The low demand for agricultural insurance in Ukraine is associated with the high cost of the service, limited choice of counter-parties, complexity of the insurance mechanism. The carried out analysis of the work of insurers in the agricultural insurance market indicates their partial participation in this type of insurance: for example, out of 64 insurers licensed for agricultural insurance, only less than a third provide services in this direction. As a result of the study of the line of insurance products for agricultural insurance, it is determined that complex and index insurance and insurance of animals and poultry are in great demand. It is found out that the extanrt system of agricultural insurance with the State support, even under the conditions of its functioning, would not have gained much popularity. The main reasons are a complex insurance mechanism, a one-time payment of 100% insurance premiums and the insecurity of the agricultural producer in obtaining the entire amount of subsidies belonging to him further on. In the future, in order to improve the situation in this industry, it is necessary to make certain amendments to the current legislation, which will revitalize the domestic sphere of agricultural insurance while providing confidence to agricultural producers in the continuity and reproduction of their output.

МЕТОДИЧНІ ПІДХОДИ ДО ФОРМУВАННЯ ТАРИФНОЇ ПОЛІТИКИ У СФЕРІ АГРАРНОГО СТРАХУВАННЯ

The article substantiates the methodological approaches to the formation of a balanced tariff policy for agricultural insurance services. The outlined approaches are based on methodological principles, which together are focused on achieving holistic guidelines (moral and ethical, socio-psychological, financial and economic) in the relationship between the insurance market stakeholders. The functioning of the insurance protection effective system of agricultural producers while ensuring a sufficient profitability level of insurance operations, requires scientific detail of the pricing mechanism for insurance services. The observance necessity of methodological sequence in the process of actuarial calculations for agricultural insurance services is argued. This sequence involves the following measures: providing access to information sources for assessing agricultural risks and deciding on insurance; processing of statistical data on specific objects of insurance, (in particular, assessing the probability of an insured event and agreeing on key conditions for the transfer of agricultural risks to insurance) the calculation of the full tariff rate (gross rate). The formulated measures are necessary from the standpoint of ensuring information awareness of insurance companies regarding the accepted insurance risks, assessing the probability of insurance risks and possible compensation payments, as well as the economic feasibility of the insurance rate (gross rate) and its components net rate and load. The economic-mathematical interpretation of insurance tariffs related to insurance of natural and climatic risks is carried out. In particular, using actuarial calculations, the rates of insurance tariffs in the insurance of crops (winter wheat, rye, winter barley and rapeseed) for the autumn-winter and spring-summer periods are reflected. The presented calculations can be used by insurance companies specializing in the provision of agricultural risk insurance services. According to the results of the study, the actor’ proposals aimed at ensuring the actuarial balance of stakeholders in the agricultural insurance market are presented.

Агрострахование с господдержкой как инструмент финансовой ус-тойчивости сельского хозяйства

Purpose: to study the system of agricultural insurance with state support in Russia to identify its advantages. Discussion. The share of agriculture in Russia's gross domestic product structure is 4 % on average. Not only food security of the country, but also an increase in the exported agricultural products volume is ensured. Unfortunately, the industry’s development prospects do not have stable dynamics due to both internal and external economic factors. The experience of the developed countries shows that government support is a key factor for sustainable agricultural development and increasing its competitiveness. This need is due to the specific risks of agriculture. So, in crop production, weather risks which are annually exposed to a number of the country agrarian-oriented regions in areas of risky farming are unpredictable. The new system of agricultural insurance with state support, consisting of two types of subsidies, guarantees compensation for agricultural producers from extreme weather situations without reference to the timing of the harvest, and also provides for a insurance certificate cost reduction. With a view to sustainable development of agriculture, the government provides for other state support programs aimed at adjusting budgetary policy, concessional lending, as well as the introduction of new “short” grants for farmers. Despite the measures taken, the volume of agricultural insurance is lower than potential due to the loss of the insured's confidence in the insurance business. Conclusions. The agricultural insurance market in Russia has a tendency to expand since 2019, and the driver of this dynamics is the changed conditions of state support for agricultural insurance.

Реалізація інноваційних інструментів розвитку аграрного страхування у світі

The article is concerned with analyzing the experience of implementing innovative instruments for the development of agrarian insurance in the world. The article is aimed at defining the latest global trends in the development of insurance in the agricultural sector in order to introduce and implement effective insurance mechanisms in domestic agricultural practice. In the course of the research, the following methods were used: dialectic cognition, abstract-logical approach – in generalization of research results and formulation of conclusions; scientific foresight – in terms of formation of directions for development of the agricultural insurance market in the world. Types of agricultural insurance are defined as follows: private agricultural insurance, the State-based agricultural insurance, non-commercial agricultural insurance. It is noted that the world experience of introducing new insurance programs under the influence of globalization transformations in the global agri-food markets demonstrates new opportunities and challenges for the development of agricultural insurance in Ukraine and requires further scientific researches. A number of reasons have been identified that hinder the development of the agricultural insurance market world-wide. A discrepancy between the dynamics of the development of the agricultural sector of the economy and the volume of agricultural insurance in the world is identified, also the underdevelopment of the insurance instrumentarium in the full extent is specified. It is emphasized that the development, implementation and success of agricultural insurance programs require a high level of coordination, cooperation and common vision. The conclusion on the extant problems of development of the insurance market in Ukraine, caused by the lack of a clear strategy for its development along with no consideration of the interests of all its participants, is substantiated.

ИССЛЕДОВАНИЕ ТЕНДЕНЦИЙ РАЗВИТИЯ НЕСУБСИДИРУЕМОГО СТРАХОВАНИЯ СЕЛЬСКОХОЗЯЙСТВЕННЫХ РИСКОВ

The relevance of the study of the development of the agricultural risk insurance system is connected with the formation of the organizational and economic mechanism for the sustainable development of the national agro-industrial complex, as one of the strategically important sectors of the economy. Insurance of agricultural risks reduces the impact of adverse weather and epizootic conditions, force majeure on the financial results of crop and livestock enterprises of the agro-industrial complex. At the same time, one of the important elements of the system is non-subsidized agricultural insurance. Having a relatively small share in the insurance services market, it still remains a sought-after type of insurance protection, both among small forms of business and among large agribusiness enterprises, possessing high variability of insurance products and conditions for concluding insurance contracts. Research on the development of unsubsidized agro-insurance is quite difficult due to the lack of continuous statistics. As a result, the analysis was based on a comparison of the dynamics of the general and relative parameters of the development of the agricultural risk insurance system. The proposed approach made it possible to allocate the share of subsidized agroinsurance and agroinsurance without state support to the total insurance market. The authors constructed and analyzed dynamic series of indicators characterizing the development of the agricultural insurance market as a whole. It was established that the values of the coefficient of insurance payments most demonstrate the effectiveness of agricultural insurance without state support. The need for this type of insurance is justified, especially at the stage of improving the regulatory and methodological base of agroinsurance with state support. An analysis of trends in the development of subsidized insurance of agricultural risks and agricultural insurance without state support in the context of the regions was carried out. Deterrents are disclosed and directions of development of unsubsidized type of agricultural insurance are determined.

ФІНАНСОВІ МЕХАНІЗМИ ЗАБЕЗПЕЧЕННЯ РОЗВИТКУ ПІДПРИЄМСТВ АГРАРНОГО СЕКТОРУ ЕКОНОМІКИ: ОСОБЛИВОСТІ ТА НЕДОЛІКИ

В умовах нестабільного ринкового середовища зростає роль ефективності управління фінансами підприємств через застосування дієвих фінансових механізмів розвитку підприємств аграрного сектору. Проаналізовано основні фінансові механізми розвитку підприємств галузі сільського господарства, визначено їх особливості та недоліки. Встановлено, що запроваджена система фінансування державної підтримки агропромислового комплексу не забезпечує визначеного на законодавчому рівні сприяння життєдіяльності аграрних підприємств, їх конкурентоспроможності на внутрішньому й зовнішньому ринках, гарантування продовольчої безпеки, посилення соціального захисту сільського населення переважно через недосконалість наявних механізмів та небажання самих аграріїв користуватися ними. Визначено стримуючі фактори кредитування аграрних підприємств та розвитку агрострахування, що унеможливлює поліпшення їх фінансового забезпечення та ефективного управління ризиками в аграрному секторі задля нарощення потенціалу їх динамічного розвитку. Ефективність фінансових механізмів забезпечення розвитку аграрного сектору економіки залежить від правильно сформованої фінансової політики окремо взятого підприємства та держави загалом, що сприяє збігу економічних інтересів аграрного підприємства та держави.

СТРАХОВІ ПРИНЦИПИ ЯК МЕТОДОЛОГІЧНА БАЗА ФОРМУВАННЯ СТРАХОВИХ ВІДНОСИН В АГРАРНОМУ СЕКТОРІ ЕКОНОМІКИ

The specificity of the agrarian production process is associated with numerous risks of various species, which leads to a special formation of relationships between the subjects of the agro-insurance market, which should be based on certain specific principles. The functioning of the agricultural insurance market and, accordingly, the formation of a system of insurance relations in the agricultural sector of the economy is based on certain principles that determine the basis for the functioning of the subject composition of the agricultural insurance market in the context of financial, economic, organizational and legal components. Compliance with fundamental insurance principles ensures the possibility of achieving a balance of property interests of participants in insurance relations. The substantive basis of insurance principles regulates the value system of key subjects of the insurance market when concluding agricultural insurance agreements. In this context, it should be noted that knowledge of the insurance methodology requires an unambiguous interpretation of the essence of the principles of the latter, which is the basis for the formation of insurance relations in the agricultural sector of the economy. Consequently, insurance principles are the basis of insurance activities accompanying all stages of the insurance process, starting with pre-contractual relations, then continuing to support contractual relations and ending with participation in their post-contractual types. In essence, the principles of agricultural insurance make it possible to properly coordinate the professional activities of participants in the agricultural insurance market, aimed at neutralizing the risks of various types of population, reflecting the fundamental principles that provide appropriate conditions for the implementation of the interests of all participants in the specified market in the context of both social and economic types. According to the results of the study, the fundamental (basic) insurance principles are classified into three main groups: first — the principles used as the basis of the process of organizing and conducting insurance activities (group of basic insurance principles); second — for risk management of insurance companies (group of additional insurance principles); third — to include special clauses in insurance contracts (group of selective insurance principles). In addition, a set of principles are highlighted that are specific and function in agricultural insurance, forming a methodological basis for the development and distribution of insurance relations in the agricultural sector of the economy, to which, according to the research results, the following principles are attributed: voluntary participation, mutual interest, tariff justification, food security, subsidies and financial stability. This systematization will allow to properly coordinate the professional activities of participants in both the insurance market and its agricultural insurance segment aimed at neutralizing the risks of various species.

СУЧАСНИЙ СТАН РИНКУ АГРАРНОГО СТРАХУВАННЯ УКРАЇНИ

Ukraine occupies a leading position in the world in the production and export of agricultural products. At the present stage of development of the agricultural sector, the most important task is its further development, because the country has significant potential to increase and improve the quality of production. Agricultural production is one of the important, specific and at the same time the most risky areas of human activity. Specific features of the agricultural market: high cost of facilities due to the large area of land, increased risk of production, cumulative losses due to natural disasters and progressive climate change, he duration of the production cycle, affects the profitability of farmers, necessitate the use of one of the most important tools for minimizing risks — insurance and, if necessary, further diversification of risks through reinsurance. The article considers the main indicators of agricultural insurance: in terms of insurance companies, in terms of regions, in terms of agricultural crops. The amount of insurance payments in terms of insurance companies and agricultural crops is analyzed. Trends in animal insurance are presented. The agricultural insurance market in Ukraine is developing slowly, but in recent years still shows a positive upward trend. For a country with a huge potential of the agricultural sector of the economy, the saturation of the agricultural insurance market with insurance services and the actual volume of agricultural risk insurance, undoubtedly, are insufficient. Now agricultural insurance in Ukraine is actively developing. However, despite the positive dynamics, the current state of agricultural insurance in Ukraine does not meet its main task - to manage risks in the agricultural sector to ensure its stable operation and sustainable development of the agricultural sector of the economy. The current system of agrarian risk insurance in Ukraine, including the provision of state support to the agricultural sector, requires improvement and should be aimed at ensuring adequate protection of the interests of agricultural producers and food security, stabilizing production and income in the agricultural sector and encouraging the best technology agricultural production

PROBLEMS OF AGRICULTURAL INSURANCE IN UKRAINE AND WAYS THEIR SOLUTIONS

The article is dedicated to the current trends of the agricultural insurance market in Ukraine. It has been established that for silskogospodarske, in accordance with the specific features and skills of the middling community, the need for a proper insurance business from a variety of derivative businesses in the case of uncomfortable natural businesses of unfair natural businesses. It is established that the risks inherent in agricultural production are systemic and create significant fees for most agricultural producers at the same time, which can lead to large insurance payments, so there is a system of regulation of complex economic processes in agriculture is insurance of agricultural products. The analysis of the legislative and normative protection of insurance claims has been completed. The payments were made, which is one of the important incentives for effective government insurance. The main indicators of insurance activity are analyzed, the development trends of the regions of Ukraine are determined, the problems of insurance and agricultural insurance are considered in the context of the participants in the events. A copy was made for the inexplicable activation of agricultural insurance as a key to the growth of the potential of the agricultural sector of the economy. In addition, the system of agricultural insurance is based on the protection of economic interests of the participants of the insurance companies (insurers, insurance and powers) and the short-term insurance of small losses in the aeronautical spheres. Based on an improved agricultural insurance system, affordability, improving the quality of insurance services, forming an effective insurance market infrastructure, a high degree of trust in insurers by policyholders, diversification of insurance products by special industry, the state's ability to provide real financial support for agricultural production.

The short- and long-term impacts of the COVID-19 pandemic on family farms in China – Evidence from a survey of 2 324 farms

Family farms are considered the most desirable form of Chinese agriculture. Studies on the risk management of family farms are rare, while the COVID-19 pandemic provides an opportunity to explore how family farms respond to risks. Based on an online survey of 2 324 family crop farms, we examine for the first time the short-term impact (immediate impact or short-term fluctuation, and farms' instantaneous response) and long-term impact (on farms' future or long-term production) of the COVID-19 pandemic on family farms' production and operation in rural China. By using factor analysis and dummy variable regression, we find that the severity of the pandemic, the lockdown of the village, and farmers' knowledge of the pandemic contribute significantly to the short-term impact, but not on the long-term impact. Farmers' characteristics such as gender, age, and education are not related to the short-term impact, but family farms with male owners or owners with high school education or below are more likely to be diversified and large-scale. The number of years the farm has existed for and agricultural insurance affect both short-term and long-term impacts. We suggest that the government needs to pay more attention to stability-enhancing policies, the market environment, vocational training and the agricultural insurance market.

Price Index Insurances in the Agriculture Markets

In this paper, we introduce price index insurances on agricultural goods. Seemingly similar to derivatives, there are significant differences between price index insurances and derivatives. First, unlike derivatives, there are no entrance barriers for purchasing insurances, making them the risk management tools that are accessible to almost all farmers. Second, since insurances are issued at a certain number for any individual farm, unlike futures, for example, they cannot be used for speculation and are used solely for hedging price risk. Third, unlike forwards, they are heavily regulated and do not default and cause counterparty risk. Besides all differences (or benefits), such products have just recently been introduced in the agricultural insurance market. In this paper, we investigate if there could have been a financially viable market where these products are traded. More precisely, we investigate if an insurance company can design a portfolio of optimal contracts that gives a higher Sharpe ratio than the financial market index prices (in our paper FTSE 100 and other three major indexes). To reach the paper's objective we take three steps, by considering theoretical, practical and corporation standpoints. In the first step, we will see how an optimal contract would look like from the demand side in a theoretical setup and we obtain the optimal contract from the farmers' standpoint. In the second step, by adopting a more practical approach, by meeting the Key Performance Indicators (KPI) requirements set by the market participants (both demand and supply side), we find the optimal policy specifications from the first step, in the market equilibrium. This step also helps to find some unobservable market parameters like volatility. Finally, by adopting a corporation standpoint we encounter our model to the UK farm index prices and find an optimal portfolio of the products on products from 10 commodities. We find out that investing in such a business is financially viable, as the optimal insurance portfolio produces a Sharpe ratio that outperforms FTSE 100 and other major market indexes.

Price Index Insurances in the Agriculture Markets

In this article, we introduce price index insurances on agricultural goods. Although these seem similar to derivatives, there are significant differences between price index insurances and derivatives. First, unlike derivatives, there are no entrance barriers for purchasing insurances, making them the risk management tools that are accessible to almost all farmers. Second, since insurances are issued in a certain number for any individual farm, unlike futures, for example, they cannot be used for speculation and are used solely for hedging price risk. Third, unlike forwards, they are heavily regulated and do not default and cause counterparty risk. In addition to all differences (or benefits), such products have just recently been introduced in the agricultural insurance market. In this article, we investigate if there could have been a financially viable market where these products are traded. More precisely, we investigate whether an insurance company can design a portfolio of optimal contracts that gives a higher Sharpe ratio than the financial market index prices (here, FTSE 100 and other three major indexes). To reach the article’s objective, we take three steps, in considering theoretical, practical, and corporation standpoints. In the first step, we show what an optimal contract would look like from the demand side in a theoretical setup and we obtain the optimal contract from the farmers' standpoint. In the second step, by adopting a more practical approach in meeting the Key Performance Indicators requirements set by the market participants (both demand and supply side), we find the optimal policies specifications from the first step, in the market equilibrium. This step also helps to determine some unobservable market parameters like volatility. Finally, by adopting a corporation standpoint we bring our model to the U.K. farm index prices and find an optimal portfolio of the products on products from 10 commodities. We demonstrate that investing in such a business is financially viable, as the optimal insurance portfolio produces a Sharpe ratio that outperforms the FTSE 100 and other major market indexes.

Rainfall-Related Weather Indices for Three Main Crops in China

Rainfall-related hazards—deficit rain and excessive rain—inevitably stress crop production, and weather index insurance is one possible financial tool to mitigate such agro-metrological losses. In this study, we investigated where two rainfall-related weather indices—anomaly-based index (AI) and humidity-based index (HI)—could be best used for three main crops (rice, wheat, and maize) in China’s main agricultural zones. A county is defined as an “insurable county” if the correlation between a weather index and yield loss was significant. Among maize-cropping counties, both weather indices identified more insurable counties for deficit rain than for excessive rain (AI: 172 vs 63; HI: 182 vs 68); moreover, AI identified lower basis risk for deficit rain in most agricultural zones while HI for excessive rain. For rice, the number of AI-insurable counties was higher than the number of HI-insurable counties for deficit rain (274 vs 164), but lower for excessive rain (199 vs 272); basis risks calculated by two weather indices showed obvious difference only in Zone I. Finally, more wheat-insurable counties (AI: 196 vs 71; HI: 73 vs 59) and smaller basis risk indicate that both weather indices performed better for excessive rain in wheat-planting counties. In addition, most insurable counties showed independent yield loss, but did not necessarily result in effective risk pooling. This study is a primary evaluation of rainfall-related weather indices for the three main crops in China, which will be significantly helpful to the agricultural insurance market and governments’ policy making.

Інституалізація агрострахування в Україні: чинники впливу та вектори розвитку

Мета. Метою статті є дослідження розвитку українського ринку страхових продуктів у сільському господарстві з виокремленням і класифікацією чинників, які впливають на динаміку основних показників ринку, та визначення на цій основі концептуальних напрямів розбудови ефективної системи агрострахування України.
 Методологія / методика / підхід. Методологію дослідження становили положення неокласичної та інституційної теорій; використано методи узагальнення та систематизації (при визначенні сучасних тенденцій розвитку ринку агрострахування), періодизації (для визначення спільних рис і розбіжностей у становленні агрострахування в Україні), статистичного аналізу (для аналізу динаміки показників розвитку аграрної сфери, ринку агрострахування), факторний аналіз (для визначення чинників впливу на ефективність агрострахування); кореляційний і регресійний аналізи (при виявленні залежності показників розвитку ринку агрострахування від макроекономічних показників й обсягів державного фінансування), прогностичний (для формулювання висновків і пропозицій щодо концептуальних векторів розвитку агрострахування).
 Результати. У результаті дослідження виявлено низький рівень проникнення страхування в сільське господарство України. Агрострахування здійснюється переважно у рослинництві. На ринку агрострахування України представлені сучасні страхові продукти, але їх асортимент є меншим у порівнянні з країнами з розвинутим агрострахуванням. Нормативно-правове забезпечення страхування продукції сільського господарства представлено значною кількістю документів, невиконання у повному обсязі окремих положень яких, наприклад, щодо державного субсидіювання страхових премій, перешкоджає розвитку агрострахування. Ми узагальнили та класифікували чинники розвитку агрострахування в Україні й використали математичну модель для виявлення основних функціональних чинників, які мають вплив на динаміку застрахованих площ. Ми встановили важливу залежність розвитку агрострахування від комплексу інституційних і функціональних чинників.
 Оригінальність / наукова новизна. Отримав подальший розвиток системний підхід до дослідження агрострахування як складника умов сталого розвитку аграрної сфери. Визначено, що реалізації потенційних можливостей агрострахування, як складника забезпечення умов сталого розвитку аграрної сфери, перешкоджають висока вартість страхових премій, недостатні обсяги фінансування державних програм, непослідовність державної політики, відсутність при її розробленні та реалізації середньострокового планування; неповнота інформації з боку стейкхолдерів щодо необхідності, доступності агрострахування. Для розвитку агрострахування необхідно зменшити негативний вплив таких чинників.
 Практична цінність / значущість. Інституалізації агрострахування, як однієї з передумов функціонування сільського господарства України на принципах сталого розвитку, будуть сприяти перехід від мультиризикового до індексного страхування, формування прозорого регуляторного середовища, запровадження середньострокового державного програмування, поширення інформації на державному рівні для стейкхолдерів щодо необхідності, доступності, доцільності агрострахування.

Rating exotic price coverage in crop revenue insurance

PurposeRevenue insurance is the most popular form of insurance available in the US federal crop insurance program. The majority of crop revenue policies are sold with a harvest price replacement feature that pays out on lost crop yields at the maximum of a realized or projected harvest price. The authors introduce a novel actuarial and statistical approach to rate revenue insurance policies with exotic price coverage: the payout depends on an order statistic or average of prices. The authors examine the price implications of different dependence models and demonstrate the feasibility of policies of this type.Design/methodology/approachHierarchical Archimedean copulas and vine copulas are used to model dependence between prices and yields and serial dependence of prices. The authors construct several synthetic exotic price coverage insurance policies and evaluate the impact of copula models on policies covering different types of risk.FindingsThe authors’ findings show that the price of exotic price coverage policies is sensitive to the choice of dependence model. Serial dependence varies across the growing season. It is possible to accurately price exotic coverage policies and we suggest these add-ons as a possible avenue for developing private crop insurance markets.Originality/valueThe authors apply hierarchical Archimedean copulas and vine copulas that allow for flexibility in the modeling of multivariate dependence. Unlike previous research, which has primarily considered dependence across space, the form of exotic price coverage requires modeling serial dependence in relative prices. Results are important for this segment of the agricultural insurance market: one of the main areas that insurers can develop private products around the federal program.

Flexible Weather Index Insurance Design with Penalized Splines

In this paper we propose a flexible framework for the design of weather index insurance (WII) based on penalized spline methods. The aim is to find the indemnity function which optimally characterizes the intricate relationship between agricultural production losses and weather variables and thus effectively improves policyholders’ utilities. We use B-spline functions to define the feasible set of the optimization problem and a penalty function to avoid the “overfitting” issue. The proposed design framework is applied to an empirical study in which we use precipitation and vapor pressure deficit (VPD) to construct an index insurance contract for corn producers in Illinois. Numerical evidence shows that the resulting optimal insurance contract effectively enhances policyholder’s utility, even in the absence of government’s premium subsidy. In addition, performance of our proposed index insurance is robust to a variety of key factors, and the general payment structure is highly interpretable for marketing purposes. All these merits indicate its potential to increase efficiency of the agricultural insurance market and thus enhance social welfare.

Analysis of Supply and Demand Situation of Agricultural Insurance Market in China from the Perspective of Government Behavior

Under the combined action of natural reproduction and economic reproduction, agricultural production process is confronted with a variety of risks intertwined with natural risk, social risk and economic risk. The emergence of agricultural insurance is only a matter of the last century, but it has become a financial tool commonly used by more than 100 countries in the world to regulate and control the economy, relieve the pressure of government relief, reduce the loss of agricultural disasters, and stabilize social relations. The development of agricultural insurance effectively alleviates the inherent weakness of agricultural insurance industry. The development of agricultural insurance market in the world is the result of various actions of the government. This paper mainly analyzes the supply and demand characteristics and equilibrium of agricultural insurance market in China from the perspective of government behavior.

Analysis on the Operating Environment of Agricultural Insurance Company

The deterioration of global ecological environment results in the frequency and intensity of natural disasters, and many factors such as GDP, interest rate level, fiscal and monetary policy indirectly affect the development of agricultural insurance market. To analyze the operating efficiency and effect of insurance institutions, we should first make clear the current situation and characteristics of the natural environment, policy environment, social environment and technical environment in which insurance institutions operate agricultural insurance business, and analyze the current situation of natural environment and economic environment respectively according to the characteristics of agricultural production. It is the premise and basis of analyzing the strategic planning and operating efficiency of agricultural insurance companies to make clear the external environment of agricultural insurance companies.