Private Crop Insurers and the Reinsurance Fund Allocation Decision

Posted: 23 Jul 2007

See all articles by Keith H. Coble

Keith H. Coble

Mississippi State University - Department of Agricultural Economics

Robert Dismukes

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Joseph W. Glauber

International Food Policy Research Institute (IFPRI)

Abstract

This research investigates the strategic behavior of private crop insurance firms reinsured by the USDA through the Standard Reinsurance Agreement. This arrangement allows the private firm to strategically allocate individual policies into different risk-sharing arrangements. Thus, firm earnings are conditioned upon accurately forecasting policy loss experience. Our analysis begins with models investigating the characteristics explaining the placement of policies into the assigned risk fund. Then a simulation model of the SRA is used to compare the post-SRA returns of actual firm allocations to two alternative allocation strategies based on a aggregate models and a policy-level econometric forecasting model.

Suggested Citation

Coble, Keith H. and Dismukes, Robert and Glauber, Joseph W. William, Private Crop Insurers and the Reinsurance Fund Allocation Decision. American Journal of Agricultural Economics, Vol. 89, No. 3, pp. 582-595, August 2007. Available at SSRN: https://ssrn.com/abstract=1002131 or http://dx.doi.org/10.1111/j.1467-8276.2007.00982.x

Keith H. Coble (Contact Author)

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States

Robert Dismukes

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

Joseph W. William Glauber

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

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