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Improving mariculture insurance premium rate calculation using an information diffusion model

Mariculture is a well-known high-risk industry. However, mariculture insurance, which is an important risk management tool, is facing serious market failure. An important reason for this market failure lies in the unsound premium rate and pricing method. Due to a lack of long-term yield data, empiri...

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Detalles Bibliográficos
Autor principal: Zhang, Qian
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Public Library of Science 2021
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8700043/
https://www.ncbi.nlm.nih.gov/pubmed/34941908
http://dx.doi.org/10.1371/journal.pone.0261323
Descripción
Sumario:Mariculture is a well-known high-risk industry. However, mariculture insurance, which is an important risk management tool, is facing serious market failure. An important reason for this market failure lies in the unsound premium rate and pricing method. Due to a lack of long-term yield data, empirical rates are often adopted, but this adoption can lead to a high loss ratio. This paper provides an improved method for premium computation of mariculture insurance using an information diffusion model (IDM). An example of oyster insurance in China shows that, compared with the traditional pricing approach, the IDM can greatly improve the accuracy and stability of premium rate calculations, especially in cases of small samples.