Desertification Picture


Starting from 2008, a fruitful collaboration was started between the Institute of Services for the Agricultural Food Market (ISMEA), and the University of Rome “La Sapienza” with the involvement of the ACRA Studio – Association for Consulting and Research (ACRA), now part of Algoritmic®.

The collaboration, still in place, produced in 2011 a first research paper, also financed with the contribution of the Ministry of Agricultural, Food and Forestry Policies aimed at defining and implementing a risk-based tariff model for the combined coverage of risks.

The aim of the study was to define, implement and test an actuarial model for estimating the reinsurance rate to cover damage to agricultural production due to natural disasters. The methodological approach proposed can be classified in the category of risk-based models and is consistent with the principles of Solvency II. It is based on a fair valuation of the insurance liabilities given by the sum of two components called respectively the best estimate and the value of the risk margin.

The risks of natural disasters differ from property insurance also for the clear identification of the event generating the damage, since it is an adverse weather event that can be ascertained even before the Insured reports the claim. The research therefore leads back to parametric forms of insurance.

Today the situation has changed profoundly but the results of that research appear current and deeply inspiring.

For those wishing to deepen the research results can refer to ISBN Code: 978-88-96095-08-9 ISMEA – «A Fair Value actuarial model for natural disaster risk in agriculture” – March 2011 – Drafted by Paolo De Angelis and others.

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