| Analysis of the Government Reinsurance Return Sharing Ratio of Crop Insurance | |||
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| Author | Chae, Honggi | ||
| Views | 7210 | Publication Date | 2023.03.30 |
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The current government reinsurance program for crop insurance follows the U.S. system in which the government and the insurance company share the profits and losses. However, the current system is not suitable for Korea because it follows the U.S. system. In this study, 3 portfolios about the project type, crop group, and loss ratio were constructed to make up for the current system's limitation. And the loss ratio distribution for each fund was estimated and simulations were performed using various methodologies. In addition, the priorities of the portfolios were presented using the mean-variance and stochastic dominance analysis. As a result of the analysis, it was found that each institution had to take more risk to increase its return, and conversely, to reduce its risk, it had to accept a decrease in profitability. According to the result of the mean-variance analysis, it is expected that the insurance company will prefer portfolio 1 or 3 depending on the strategy, and the government is expected to prefer portfolio 2 in any strategy. And as a result of the stochastic dominance analysis, the insurance company is expected to show the most preference for portfolio 3, followed by portfolio 2 and portfolio 1 in that order. On the other hand, it is expected that the government will prefer portfolio 2 or 1 the most and have the lowest preference for portfolio 3. This study is expected to provide a basic framework for establishing a reinsurance decision support system for the government and insurance companies. |
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