1. Expanding on Basis Risk Estimates for Pasture, Rangeland, and Forage Insurance.
- Author
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Feuz, Ryan, Bosworth, Ryan, Larsen, Ryan, Larsen, Royce, Klein, Sean, Shapero, Matthew W. K., Rao, Devii R., and Althouse, LynneDee
- Subjects
- *
RANGE management , *INDEX insurance , *RAINFALL , *PROBABILITY theory - Abstract
Basis risk or residual risk arising from disparity between an index's estimate of losses and actual losses is inherent in index-based insurance products. We approximate basis risk as the false negative probability (FNP) within pasture, rangeland, and forage (PRF) rainfall index insurance for the south-central coastal region of California. We estimate the FNP on average that at least one of two selected coverage intervals will fail to provide an indemnity when a loss is realized at 48%. The average FNP is reduced to only 11% when considering whether both selected intervals fail to provide an indemnity when a loss is realized. [ABSTRACT FROM AUTHOR]
- Published
- 2023
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