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Designing and Rating an Area Yield Crop Insurance Contract
Author(s) -
Skees Jerry R.,
Black J. Roy,
Barnett Barry J.
Publication year - 1997
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1244141
Subject(s) - indemnity , crop insurance , yield (engineering) , corporation , payment , product (mathematics) , actuarial science , business , agricultural economics , economics , agricultural science , agriculture , finance , environmental science , geography , mathematics , geometry , materials science , archaeology , metallurgy
Abstract This article documents the design and rate‐making procedures used in the development of the Group Risk Plan (GRP)—the new federal crop insurance product that insures based on area yield. The authors of this article worked closely with personnel in the Federal Crop Insurance Corporation and others in developing methodological and practical constraints needed in implementing a workable area yield contract. GRP indemnity payments are made based on percentage shortfalls in actual county yields relative to a forecasted yield. Historical county yield data are used to develop forecasted yields and premium rates.