A MODEL FOR DETERMINING PREMIUM RATES IN INDEXBASED CROP INSURANCE

A MODEL FOR DETERMINING PREMIUM RATES IN INDEXBASED CROP INSURANCE

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The paper deals with index-based crop insurance as a tool for managing flood and drought risks in agriculture.We introduce a novel model for determining premium rates in index-based crop insurance which combines the loss cost method and the average yield method.The proposed model was applied to data related to the production of Lacrosse - Protective - Arm selected crops in Serbia to calculate unique premium rates for index-based insurance for cereals, industrial crops and fodder plants.The paper also Colour LED outlines the prerequisites for index-based crop insurance to become technically, operationally, and financially feasible in Serbia.We propose the introduction of mandatory index-based crop insurance, along with necessary legislative amendments and subsidization of insurance premiums.