Reasonable Premium Research Articles

Producer Welfare Benefits of Rating Area Yield Crop Insurance

Index-based insurance is an innovative concept for evaluating agricultural risks and payouts, which uses an index instead of traditional on-site loss assessment. Area yield insurance, as an index-based approach, is an effective strategy to mitigate moral hazard and adverse selection issues. This study aims to develop area yield insurance as a new insurance plan in Iran for two major crops: wheat and barley. It utilized kernel and joint kernel distributions to price the insurance and assessed producer welfare benefits by comparing the certainty equivalence (CE) of farmers’ utility with and without the policy. Data were collected from East Azerbaijan Province, including county-level yield data for irrigated and rainfed wheat and barley from 1975 to 2019 and 446 individual-level yield data from 2015 to 2019. A two-stage method was used to model yield risk: the first stage fits a trend model, while the second estimates the yield distributions with the detrended data. The results showed a significant difference in premiums calculated by the two distributions, with joint kernel distribution offering the best empirical fit and reasonable premiums. The findings indicate that area yield crop insurance provides positive welfare benefits and should serve as a viable alternative or complement to existing yield insurance plans. The successful implementation of this policy in various countries suggests it can be a suitable risk management program for developing countries like Iran.

Perception towards Cervical Cancer Insurance Policy: A Study on Women in Barishal City

The purpose of this research paper is to assess the perception of urban women towards having an insurance policy as a precaution against cervical cancer. Data required for the research have been collected from primary data source taking into consideration total 170 female as respondents who have been living in Barishal city with at least 18 years old. Frequency distribution has been used to explain the response of 27 questions comprising demographic and financial aspect of the respondents. Reliability of the survey has been tested by Cronbach's Alpha with satisfied value of more than 0.705. Moreover, a regression analysis has been used for finding out the most significant factors influencing the willingness of purchasing cervical cancer insurance policy in near future covering 7 relevant variables. Overall, it has been found that approximately 23% respondents from the surveyed sample has a history to be encountered with cervical problems like ovarian cyst, uterus infection etc. However, most of them neither had any screening nor have any health insurance policy as a precaution against cancer. Moreover, significant number of participants are willing to purchase a cancer insurance policy if it is with a very reasonable premium.

Targeted approaches to improve tomato fruit taste.

Tomato (Solanum lycopersicum) is the most valuable fruit and horticultural crop species worldwide. Compared with the fruits of their progenitors, those of modern tomato cultivars are, however, often described as having unsatisfactory taste or lacking flavor. The flavor of a tomato fruit arises from a complex mix of tastes and volatile metabolites, including sugars, acids, amino acids, and various volatiles. However, considerable differences in fruit flavor occur among tomato varieties, resulting in mixed consumer experiences. While tomato breeding has traditionally been driven by the desire for continual increases in yield and the introduction of traits that provide a long shelf-life, consumers are prepared to pay a reasonable premium for taste. Therefore, it is necessary to characterize preferences of tomato flavor and to define its underlying genetic basis. Here, we review recent conceptual and technological advances that have rendered this more feasible, including multi-omics-based QTL and association analyses, along with the use of trained testing panels, and machine learning approaches. This review proposes how the comprehensive datasets compiled to date could allow a precise rational design of tomato germplasm resources with improved organoleptic quality for the future.

Introduction to weather derivatives

AbstractThe weather is one of the factors that may have an impact on the countries' economies. There are two main hedging ways against unexpected weather conditions: weather derivatives and weather insurances. During the last two decades, companies started to use weather derivatives against weather issues, especially in the energy and agriculture sectors. Starting from weather derivatives' first launch, their transaction volumes at the exchange and over‐the‐counter markets have increased. In addition to the increasing dependency of the economies on the weather, providing the weather derivative contracts with a reasonable premium amount is another reason which helps to have this positive trend. Since weather derivatives have similar parameters and rules with classical financial derivatives, it is possible to use the same pricing approaches for financial and weather derivatives. Monte–Carlo simulation, based on random number generation, is one of the existing methods of pricing derivative contracts. A difference between simulated values and really occurred data is the base point of the expected payoff or price of the contract. The current article introduces weather derivatives and shows two different approaches to their pricing, where one of them requires deeper statistical analysis. Adding the statistical analysis into the consideration, defining the relation between each data value, helps to provide better estimation and less volatility. Having less volatility can provide more accurate estimations and reasonable prices that are affordable and desired by the companies.This article is categorized under: Energy Systems Economics > Economics and Policy Energy Systems Economics > Systems and Infrastructure

Farmers’ Opinion on Cost and Benefit of Agriculture Insurance

Agriculture development is an index of country’s progress because the development of all other sectors depends upon the development of agriculture sector. But, the development of agriculture is affected by natural disasters. Agriculture insurance is an only protective mechanism against the perils present in agriculture. It largely solves the problem of farmers and largely in the hands of farmers. The subscription and success of agriculture insurance is determined by its cost and benefit. If the farmers have positive opinion on cost and benefit of agriculture insurance they will come forward to subscribe and stabilize their wealth and sustain the economic growth of nation by agriculture. This phenomenon, induce the researchers to stumble upon the solution to assess the opinion of farmers on cost and benefit of agriculture insurance and to test the significant difference in the farmers’ opinion on cost and benefit of agriculture insurance. The primary data collected from 600 farmers availing agriculture insurance within Tirunelveli District in the Indian State of Tamil Nadu to make an in-depth study to address the above issues. The respondents were selected by adopting stratified random sampling technique. The collected data were analyzed by applying Percentage Analysis and Sign test. The study revealed that green insurance is a beneficial plan to the farmers to face the negative income shock at reasonable premium. The majority of the respondents felt that agriculture insurance has covered 0-50% risk. Sign Test proved that there is a significant difference in the opinion of farmers on the cost and benefits of agriculture insurance. Technological adoption in the estimation of loss of crop yield, prompt settlement of claims and additional perils at additional premium are suggested mission to enhance the vision of the farmers on cost and benefits of agriculture insurance. Besides, it helps the farmers to lead a peaceful life and induce them to contribute more towards sustainable agriculture development of the country.

A Study on the Problems and Countermeasure of the Excepted or Excluded Perils in Cargo Insurance Terms

적하보험약관에서 면책위험은 협회적하신약관의 면책조항 제4조에서 규정된 내용과 연관하여 보았을 때, ICC(A)조항은 그에 대한 내용을 포괄적으로 규정하고 있으므로 적하보험 가입자 들이 고가의 보험료를 지불해야 하는 부담을 가지게 된다. 적하보험에서는 ICC(B)와 ICC(C)의 열거주의 방식에 따른 적하물의 특성에 적절한 특약설정을 사용함으로서 보다 합리적인 보험료의 조건을 선택할 수 있는 기회를 제공하여야 한다. 무역 보험에서 적하보험 계약체결 시 가장 적절한 보험료 설계를 통해 보험자와 피보험자 모두 상호간 이익을 향유하면서 동시에 대외적 경쟁력 우위 또한 점할 수 있어야 한다. 적하보험 면책의 문제점으로는 면책위험의 비체계적인 분류, 비열거위험에 관한 이해 부족, 면책위험의 해석상의 논란 등을 들 수 있다. 이에 따른 대응으로는 운송의 지연 손해에 관한 면책조항 설정, 통상의 손실 범위의 명확화, 불법행위의 완화 등을 들 수 있다.Purpose : In trade insurance, there is a contradiction in that the insured risk of the ICC(A) clause comprehensively defines the risk, so that insured have a burden of paying high premiums. Research design, data, methodology : We suggest ways to gain mutual benefits by examining ways to implement equal insurance contracts without imposing unreasonable premiums on only one of the insured. Results : Cargo insurance terms should provide an opportunity to select a more reasonable premium condition by using the appropriate rider set for the characteristics of the loading in accordance with the ICC(B) and ICC(C) enumeration methods. Conclusions : The problems of cargo insurance indemnity include non-systematic classification of indemnification risk, lack of understanding of non-enrollment risk, and controversial interpretation of indemnification risk. These responses include setting up disclaimers on delayed transport damages, clarifying the scope of normal losses, and alleviation of illegal activities.

What Makes Consumers Pay More for National Brands than for Store Brands - Image or Quality?

Private labels or store brands have become a major force to reckon with in grocery products.They account for over one-fifth of total volume sales in the United States and are growing faster than national brands. Generally, prices of national brands are higher than store brand prices. Therefore, a consumer would purchase the national brand (store brand) if the premium s/he is willing to pay for the national brand over the store brand is more (less) than the actual price differential between the two brands. Thus our understanding of why some consumers purchase national brands and others purchase store brands would be enhanced by gaining insights into why consumers are willing to pay a price premium for national brands over store brands. In this study, I attempt to understand why consumers are willing to pay a higher price for national brands than for store brands in grocery products. Is it because of perceived quality differential or non-quality utility? Non-quality utility is defined as the price premium that consumers would pay for a national brand over a store brand even when they perceive the quality of the two brands to be the same. The utility arises from positive brand image, brand associations, or brand equity. The study draws upon a general utility framework and develops an econometric model for separating the total price premium that consumers are willing to pay into three components -perceived quality differential, quality sensitivity, and non-quality utility. The econometric model is estimated using a survey that collected information on what consumers reported that they are willing to pay for national brands vs. store brands. The data set consists of 2237 observations from 132 consumers on 20 grocery products. The key qualitative insight is that perceived quality differential and non-quality utility or brand image dominate in different stages of the purchase process. Perceived quality differential or acceptable store brand quality is the primary driving force in a consumer's decision to participate in or consider store brand purchase. However, when it comes to deciding how much more to pay for national brands over store brands, brand image or brand equity is the dominant factor. In fact, consumers will pay a reasonable premium for national brands even if they perceive the national brand and store brand to have the same quality. This finding represents good news for national brand managers because it allows them to command a reasonable price premium even when retailers close the quality gap. National brand managers should maintain and increase their brand's equity through frequent and effective advertising and other equity-enhancing strategies. Retailers should recognize the importance of national brand equity and set their price differential appropriately. Just because retailers have closed the quality gap does not mean that they can close the price gap and maintain a low price differential. They should also not set the price differential too high and charge a low price for store brands since low prices may create negative brand associations for the store brand. The paper also discusses several other finding and their implications for segmentation and promotion strategies for both manufacturers and retailers.

The Case for a Private Healthcare Insurance Monopoly.

This article advocates for a regulated private monopoly as an audacious solution to replace Obamacare, help manage Medicare and Medicaid and reform the US healthcare insurance industry. Contemporary economics vilifies monopolies and praises the 'magic wand' of perfect competition without much debate on the merits of these assumptions. The problems with the perfect competition model as applied to healthcare insurance are well established, but exploration of other possible economic models (i.e. monopoly and oligopoly) as a replacement for Obamacare is non-existent. New thinking about the role of monopolies may help achieve public policy goals and make health insurance available to the largest number of people at a reasonable premium while containing medical costs.

Estimated value of insurance premium due to Citarum River flood by using Bayesian method

Citarum river flood in South Bandung, West Java Indonesia, often happens every year. It causes property damage, producing economic loss. The risk of loss can be mitigated by following the flood insurance program. In this paper, we discussed about the estimated value of insurance premiums due to Citarum river flood by Bayesian method. It is assumed that the risk data for flood losses follows the Pareto distribution with the right fat-tail. The estimation of distribution model parameters is done by using Bayesian method. First, parameter estimation is done with assumption that prior comes from Gamma distribution family, while observation data follow Pareto distribution. Second, flood loss data is simulated based on the probability of damage in each flood affected area. The result of the analysis shows that the estimated premium value of insurance based on pure premium principle is as follows: for the loss value of IDR 629.65 million of premium IDR 338.63 million; for a loss of IDR 584.30 million of its premium IDR 314.24 million; and the loss value of IDR 574.53 million of its premium IDR 308.95 million. The premium value estimator can be used as neither a reference in the decision of reasonable premium determination, so as not to incriminate the insured, nor it result in loss of the insurer.

Design for the pricing strategy of return-freight insurance based on online product reviews

Abstract To resolve online shopping disputes with product return, some insurance companies have developed a new type of insurance called return-freight insurance to compensate consumers’ loss of return-freight fees. Traditional insurance-premium determination (such as support vector machines) has not fully merged all e-commerce factors, such as the product-fit uncertainty of online shopping, that could affect both insurance demand and return quantity. Based on these traits, we develop a profit-maximization model in terms of certain market-reaction parameters, especially product-fit uncertainty, and calculate the optimal pricing strategy, including both the insurance premium and the compensation. Using prospect theory, we explain why online product review could influence insurance applicants’ risk-averse behavior in the e-commerce situation. Then we solve for the reasonable premium and compensation given online product reviews from the insurance company’s perspective and obtain a number of managerial guidelines for using marketing and operational-strategy variables to influence those reaction parameters so as to obtain the maximum benefit from the market. Interestingly, when consumers’ sensitivity to product-fit uncertainty is moderate, an increase in product-fit uncertainty moves insurance premium and compensation in the opposite direction.

Do Health Claims and Prior Awareness Influence Consumers' Preferences for Unhealthy Foods? The Case of Functional Children's Snacks

AbstractThis study investigates if and how the translation of different types of functionality into measurable “amounts” of healthiness influences parents' preference for an a priori unhealthy (but tasty) food product (i.e., sweet or salty children's snacks). Moreover, it aims to explore whether perceptions about healthiness related to functionality types differ among consumers according to their level of prior awareness of functionality and its health benefits. The application of the discrete choice experimental technique on a sample of 140 parents with at least one 5‐ to 14‐year‐old child was selected as the most suitable methodological approach. The sample purposively comprised two subsamples of 70 parents each, based on their real awareness of the term “functional” and of the health benefits of specific functionality types. Parents generally perceived functionality as a product attribute that contributes positively to the image enhancement of the (unhealthy) target product and affirmed that they are willing to pay reasonable premiums for it. However, the level of consumers' prior awareness of functionality played a decisive role in their preference for functional products. The type of food that “carries” functionality was also more important when consumers had no knowledge of functionality. Overall, prior and accurate awareness was found to increase the variety of functionality types and preferred carriers, the strength of preference per functionality type, and the price premiums willingly paid.

Hurricane Insurance in Florida

This paper studies the evolution of hurricane insurance in Florida over the last decades. Hurricanes (and other natural catastrophes) are typically referred to as “uninsurable” risks. The more exposed property owners find it difficult to obtain insurance cover from the private market and/or can do so only at premiums that substantially exceed their expected claims costs. The state of Florida has reacted to the incapacity of the private sector to insure hurricane risks at reasonable premium levels with the creation of Citizens Property Insurance Corporation (an insurer of last resort) and the Florida Hurricane Catastrophe Fund. Their existence has resulted in substantial premium reductions for the Florida property owners. Both institutions have the possibility of spreading the costs of a major hurricane over a (very) large number of policy holders through after the event compulsory assessments. The risk borne by each individual property owner is thus reasonably small, with substantial benefits for consumers as a group. Looking forward the challenge to the policy maker will be to fine-tune the operation (premium structure) of these two institutions so as to increase their political acceptance. To this end it will be necessary to limit the implicit subsidy of the “bad risks” through the “good risks”.

Alternatif penyelesaian sengketa asuransi melalui Badan Mediasi Asuransi Indonesia (BMAI)

Insurance began to interest the public as a wqy to transfer risk. The important thing is that people should be able to choose health insurance companies (solvent), a reasonable premium rate, a good investment performance (Liquid, safe, and productive), to pay claims on time, do not make poliry holders, to report correctfy and on time, and did not violate an existing report. In practice, disputes often arise between the insurer and the insured Disputes can be resolved through Indonesian Insurance Mediation Board (BMAI). BMAI dispute settlement through the mediation process begins with. if the mediation process fails, will proceed to the level of aqjudication. In addition, if the insured can not accept the decision at the aqjudication level, so that he can bring the dispute to arbitration or court. But besides these advantages, BMAI also not free from some weaknesses. However, their presence is still needed to be one of the alternative dispute resolution insurance agencies in Indonesia.

Medical malpractice crisis: Florida's recent experience.

As summarized in several previous Circulation Mini-Reviews1–3 and elsewhere,4 the United States is experiencing a growing deficit in cardiovascular physicians that is made worse as cardiovascular diseases become more prevalent. Important contributors to this deficit in the cardiovascular workforce and other specialty workforces are the high and rising costs of malpractice premiums in the majority of our states.5 As cardiovascular specialists in Florida (cardiothoracic surgery and cardiology), we are at the center of this crisis. In the present review, we will examine the problem along with recent activities related to this crisis in Florida and discuss their implications. The American Medical Association stated in June 2002, that the majority (>40) of our states had major problems in that members of high-risk specialties were leaving or considering leaving their practices. Then–AMA President, Richard F. Corlin, MD, stated, “doctors are disappearing from American communities on a regular basis because of skyrocketing medical liability insurance premiums and an out-of-control legal system. As insurance becomes unaffordable or unavailable, and the legal system produces multi-million dollar jury awards on a regular basis, physicians are forced to limit services, leave practices, or relocate—all of which seriously impede patient access to high quality health care.” Florida (along with Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington, and West Virginia) was among the 12 states considered to be at crisis level. According to the Department of Insurance in Florida, in 1975, total indemnity payments for professional liability cases were $10 271 090. By 2001, this had increased 3074% to a total indemnity payout of $326 052 228. A survey of comparative 2002 malpractice insurance premiums revealed that an invasive cardiologist in Los Angeles paid $16 148 for $1 000 000 coverage, whereas the same specialist in Miami paid $106 497, highest …

General risk constraints

The risk evaluation process is integrated with procedures for handling vague and numerically imprecise probabilities and utilities. A body of empirical evidence has shown that many managers would welcome new ways of highlighting catastrophic consequences, as well as means to evaluate decision situations involving high risks. When events occur frequently and their consequences are not severe, it is relatively simple to calculate the risk exposure of an organization, as well as a reasonable premium when an insurance transaction is made, relying on variations of the principle of maximizing the expected utility. When, on the other hand, the frequency of damages is low, the situation is considerably more difficult, especially if catastrophic events may occur. When the quality of estimates is poor, e.g. when evaluating low-probability/highconsequence risks, the customary use of quantitative rules together with unrealistically precise data could be harmful as well as misleading. We point out some problematic features of evaluations performed using utility theory and criticize the demand for precise data in situations where none is available. As an alternative to traditional models, we suggest a method that allows for interval statements and comparisons, which does not require the use of numerically precise statements of probability, cost, or utility in a general sense. In order to attain a reasonable level of security, and because it has been shown that managers tend to focus on large negative losses, it is argued that a risk constraint should be imposed on the analysis. The strategies are evaluated relative to a set of such constraints considering how risky the strategies are. The shortcomings of utility theory can in part be compensated for by the introduction of risk constraints.

The role of nuclear energy in reducing the environmental impacts of China's energy use

China's demand for energy in general, and for electricity, is expected to continue to increase for at least the next several decades. Environmental and financial considerations are amongst the major factors that will determine the sources used for generating electricity. In this paper, we compare the cost of supplying electricity from coal, hydro and nuclear facilities to China's Eastern coastal areas. If the full system costs are compared, the cost of electricity from nuclear and hydro power plants is about the same in most cases and about 20% more than the cost from conventional coal-fired plants. This may be a reasonable premium to pay for reducing the local, regional, and global environmental impacts associated with the increased use of coal.

Ex Ante Uncertainty and the Underpricing of Initial Public Offerings: Further Canadian Evidence

AbstractThis paper extends the empirical analysis of Jog and Riding (1987) using Canadian IPOs into the prediction that the underpricing of IPOs increases with ex ante uncertainty. We consider a wide range of variables argued in the literature to proxy for ex ante uncertainty, as well as one additional variable which is uniquely available in the Canadian setting ‐ the decision to include an earnings forecast in the offering prospectus. The results are, for the most part, consistent with those of studies based on U. S. IPOs, and with Jog and Riding. In addition, we find the relation between underpricing and the decision to forecast variable to be statistically significant in the predicted direction. There are, however, several surprises. The most notable of these are the significance of the market‐based risk and ownership retention measures (in contrast with Jog and Riding) and the lack of significance of the age variable (in contrast with Ritter, 1984).RésuméCette étude étend l'analyse empirique de Jog et Riding (1987) en utilisant les offres publiques initiales canadiennes pour prédire que la sous‐évaluation de ces offres augmente avec l'incertitude ex ante. Nous avons examinéplusieurs variables qui ont étéprésentées dans la littérature pour représenter l'incertitude ex ante en plus d'une variable qui est uniquement disponible dans le milieu canadien, soit la décision d'inclure une prévision des revenus dans les prospectus. Les résultats sont, pour la plupart, en accord avec les études basées sur les offres publiques initiales aux Etats‐Unis et avec les études de Jog et Riding. Aussi, nous avons trouvéque la relation entre la sous‐évaluation et la décision de produire une prévision des revenus est en accord avec la tendance généralement observée, et est significative au point de vue statistique. Il existe quand měme plusieurs surprises dans les résultats. Les plus intéressantes sont l'importance de la mesure du risque basésur le marchéet sur la rétention de propriété(contrairement à Jog et Riding) et le peu d'impact de la variable de l'ǎge (contrairement à Ritter, 1984).