Crop-Hail Insurance Ratemaking

Monetary loss as a result of hail damage to crops is a major hazard facing farmers in many areas of the United States. Crop-hail insurance provides a means for the farmer to protect his income from the consequences of this hazard. The authors presume that knowledge of crop-hail ratemaking procedures is not widespread among casualty actuaries. This paper will attempt to introduce the reader to the basics of crop-hail insurance and some of the ratemaking procedures currently used in the industry. The paper begins with a brief background on the crop-hail industry, the standard crop-hail policy, claims adjustment, and data collection. The central focus of the paper is upon crop-hail pure premium estimation, the development of final rates, and an analysis of the pure premium estimation procedure. Keywords: LOB-Crop and Hail