Catastrophic risk existing objectively in agricultural production is the main cause for the imbalance of the agricultural insurance markets, and to promote the sustainable development of the agricultural insurance, it is necessary to improve the agricultural insurance risk transfer mechanisms. Under the condition of farms and insurance companies expected utility maximum, we develop an agricultural insurance market equilibrium model based on the M-V preference function, and then demonstrate that catastrophic risk leads to the imbalance in the agricultural insurance market. Insurance companies involved in reinsurance arrangements helps rectify the imbalances in agricultural insurance market. Based on this analysis we verify the development of Hubeis agricultural insurance market, and then simulate the reinsurance arrangement of Hubei agricultural insurance. The theoretic and empirical analysis has an implication for the design of agricultural insurance catastrophe risk transfer tools.
A comparative study of the application of alternative risk transfer methods of insurance in South Africa and Zimbabwe