Estimation of Crop Yields and Insurance Premiums Using a Shrinkage Estimator. Issue 2 (3rd April 2018)

• Record Type: Journal Article
• Authors: Awondo, Sebastain N.; Ramirez, Octavio A.; Datta, Gauri S.; Colson, Gregory; Fonsah, Esendugue G.
• Is Part Of: North American actuarial journal. Volume 22:Issue 2(2018)
• Page Start: 289
• Page End: 308
• Publication Date: 2018-04-03
• Subjects: Life insurance -- Research -- North America -- Periodicals; Actuarial science -- North America -- Periodicals; Web sites; Electronic journals; 368.010973
• DOI: 10.1080/10920277.2017.1404477
• Languages: English
• ISSNs: 2325-0453

Abstract

Abstract : We explore the estimation of crop yields and insurance premiums using a hierarchical Bayes small area estimator. The estimator is evaluated for Area Yield Production (AYP) policy using quasi-simulated corn yields in the United States. Its performance in producing reliable mean county yield and premium estimates is compared to that of a naive estimator. We also investigate the impact of these efficiency improvements on the residual losses between a farm-level policy and AYP. The proposed estimator is found to be substantially more efficient and less biased than the naive estimator.