Insurance Premium Calculation Using Credibility Analysis: An Example From Livestock Mortality Insurance

Authors

  • Jeffrey Pai,

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    • Jeffrey Pai is the Warren Professor in the Warren Centre for Actuarial Studies and Research, Asper School of Business, University of Manitoba. The author can be contacted via e-mail: jeffrey.pai@ad.umanitoba.ca. Milton Boyd is a Professor in the Department of Agri-Business & Agricultural Economics, and an Adjunct Professor at the Asper School of Business, University of Manitoba. The author can be contacted via e-mail: milton.boyd@ad.umanitoba.ca. Lysa Porth is an Assistant Professor in the Warren Centre for Actuarial Studies and Research, Asper School of Business, University of Manitoba. The author can be contacted via e-mail: lysa.porth@ad.umanitoba.ca. We thank Sam Cox, the editors, and an anonymous referee for their valuable suggestions and comments. We are also grateful to Agriculture and Agri-Food Canada (AAFC) for the research funding.
  • Milton Boyd,

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    • Jeffrey Pai is the Warren Professor in the Warren Centre for Actuarial Studies and Research, Asper School of Business, University of Manitoba. The author can be contacted via e-mail: jeffrey.pai@ad.umanitoba.ca. Milton Boyd is a Professor in the Department of Agri-Business & Agricultural Economics, and an Adjunct Professor at the Asper School of Business, University of Manitoba. The author can be contacted via e-mail: milton.boyd@ad.umanitoba.ca. Lysa Porth is an Assistant Professor in the Warren Centre for Actuarial Studies and Research, Asper School of Business, University of Manitoba. The author can be contacted via e-mail: lysa.porth@ad.umanitoba.ca. We thank Sam Cox, the editors, and an anonymous referee for their valuable suggestions and comments. We are also grateful to Agriculture and Agri-Food Canada (AAFC) for the research funding.
  • Lysa Porth

    Search for more papers by this author
    • Jeffrey Pai is the Warren Professor in the Warren Centre for Actuarial Studies and Research, Asper School of Business, University of Manitoba. The author can be contacted via e-mail: jeffrey.pai@ad.umanitoba.ca. Milton Boyd is a Professor in the Department of Agri-Business & Agricultural Economics, and an Adjunct Professor at the Asper School of Business, University of Manitoba. The author can be contacted via e-mail: milton.boyd@ad.umanitoba.ca. Lysa Porth is an Assistant Professor in the Warren Centre for Actuarial Studies and Research, Asper School of Business, University of Manitoba. The author can be contacted via e-mail: lysa.porth@ad.umanitoba.ca. We thank Sam Cox, the editors, and an anonymous referee for their valuable suggestions and comments. We are also grateful to Agriculture and Agri-Food Canada (AAFC) for the research funding.

ABSTRACT

A major problem facing livestock producers is animal mortality risk. Livestock mortality insurance is still at the initial stages, and premium computation approaches are still relatively new and will require more research. This study seeks to provide a first step for developing a better understanding of livestock insurance as a solution to mortality risk, as it explores improved methods for livestock mortality insurance modeling procedures, and premium computation, using credibility analysis. The purpose of this study is to develop improved estimates for livestock mortality insurance premiums for Canada under a credibility framework. We illustrate our approach through one example using livestock data from 1999 to 2007.

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