Development Potential of Regional Parametric Insurance Programs in Russia
The subject of the research is the study of Russian and international experience in the use of index insurance. It is revealed that parametric insurance is used both in developed and developing insurance markets. The aim of the study is to propose an index insurance model based on two parameters: temperature and precipitation - with the possibility of using this model for regional index insurance programs in Russia. The authors put forward a hypothesis that the model of index insurance of crops against drought can be based on two parameters for a more accurate determination of the amount of insurance premiums. The study is built on the basis of statistical data from 85 subjects of the Russian Federation on precipitation, temperature, yields for the period from 1996 to 2015. We used the method of correlation analysis to select the region for the model. To test the model, one region was chosen - Bryansk region, where the greatest correlation between the parameters was found. The study proved the economic feasibility of index insurance model based on one subject of the Russian Federation in comparison with the insurance program with state support. It is proved that the calculation of the model with two parameters has a lower level of risk than the calculation of the model with one parameter. It makes possible reduction of the net premium rate and competition with insurers programs drawn up with the support of the state. The authors highlight the existing problems of insurance with state support and identified the need to create regional insurance programs for various crops to protect against catastrophic risks, such as drought, frost, floods and others on the basis of meteorological data. We conclude that the proposed model makes possible to expand the insurance of farmers’ risks, creation of several programs with different sets of insurance risks, and reduction of the risk of fraud by more accurate calculation of the insurance premium.