농작물재해보험 할인･할증시스템의 적정성 분석

Measuring the Adequacy of Bonus-Malus System in Crop Insurance

This study sets up a Bonus-Malus System (BMS) in Korean crop insurance to resolve a double loaded penalty in current BMS. The BMS in this study adopts the model suggested by Frangos and Vrontos (2001) with Bayes’ theorem, where initial premium rate is determined by prior distribution but is updated with the loss experience by individual farmers with lapse of time. The concept of fairness suggested by Heras, Vilar and Gil (2002) is adopted to support the BMS developed. For the study, crop insurance data including premium, indemnity and frequency of occurrence provided by NH Property & Casualty Insurance Corporation (the insurer) are used. Among the crops insured only apple and pear are chosen because the two crops have the longest history of crop insurance and ranks the highest insured rate during the program period.