ON CHOOSING A BASE COVERAGE LEVEL FOR MULTIPLE PERIL CROP INSURANCE CONTRACTS
By: Ker, Alan P.; Coble, Keith H.
Ker, Alan P.; Coble, Keith H., ON CHOOSING A BASE COVERAGE LEVEL FOR MULTIPLE PERIL CROP INSURANCE CONTRACTS, Journal of Agricultural and Resource Economics, Volume 23, Issue 2, December 1998, Pages 427-444
For multiple peril crop insurance, the U.S. Department of Agriculture's Risk Management Agency estimates the premium rate for a base coverage level and then uses multiplicative adjustment factors to recover rates at other coverage levels. Given this methodology, accurate estimation of the base coverage level from 65% to 50%. The purpose of this analysis was to provide some insight into whether such a change should or should not be carried out. Not surprisingly, our findings indicate that the higher coverage level should be maintained as the base.