A Spatial Econometric Analysis of Loss Experience in the U.S. Crop Insurance Program

Joshua D. Woodard, Gary D. Schnitkey, Bruce J. Sherrick, Nancy Lozano-Gracia, Luc Anselin

Research output: Contribution to journalArticle

26 Scopus citations

Abstract

Patterns in loss-ratio experience in the U.S. corn insurance market are investigated with a spatial econometric model. The results demonstrate systematic geographically related misratings and provide estimates of the impacts of several observable factors on the magnitude of misrating in the program. The model is used to estimate actuarial cross-subsidizations across the primary corn-producing states and counties. The impacts of the primary factors are substantial, resulting in net premium transfers of approximately 26 percent of total premiums annually. The misratings likely have important insurance demand, welfare, and land-use implications.

Original languageEnglish (US)
Pages (from-to)261-286
Number of pages26
JournalJournal of Risk and Insurance
Volume79
Issue number1
DOIs
Publication statusPublished - Mar 2012

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ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Woodard, J. D., Schnitkey, G. D., Sherrick, B. J., Lozano-Gracia, N., & Anselin, L. (2012). A Spatial Econometric Analysis of Loss Experience in the U.S. Crop Insurance Program. Journal of Risk and Insurance, 79(1), 261-286. https://doi.org/10.1111/j.1539-6975.2010.01397.x