Grain Area Yield Index Insurance Ratemaking Based on Time–Space Risk Adjustment in China

Round 1

Reviewer 1 Report

This paper presented the insurance rate-making issue by proposing the mathematical models and using the time-spatial varying data. From the actuarial science perspective, there is merit from this work and it is publishable after significant improvement in terms of formatting and the style of presentation, for other journals that focus on risk analysis. The main concern of this manuscript is the suitability to be published in a sustainability journal. In my opinion, the evidence of significance is weak. the only point was discussed is the sustainability of catastrophic loss management. However, there is no further discussion on how this work help improves and sustainable development and its significance.  In the present form, I can not recommend acceptance of this manuscript.

The following are part of examples that require further change and refinement but this is not a complete list.

1)In the introduction, the recent development of sustainability problems in

agriculture insurance must be surveyed.

2) In the introduction, how the rate-making approaches improve the sustainability must be clearly stated in order to justify this work is relevant and can be considered to publish in this journal.  

3) In line 47, what is the cost-loss ratio? in actuarial science, we call the loss-ratio rate-making approach. it looks like the authors are referring to this. 

4) In line 55, "the premium loss rate" does not make sense to me. I think what you refer to is the loss ratio, which is the ratio of the loss amount to the premium collected. 

5) In line 65, The rate-making approaches including the pure premium and security premium must be clearly defined as they seem to be different terms when compared to the rate-making in actuarial science. The pure premium in actuarial science means the expected loss. The actual premium charged is defined as pure premium multiples by a loading factor, which again similar to the security premium, but they seem to be different terms. My suggestion is to clearly define the term used in this paper.

6) In line 66, loss risk analysis -> risk analysis.

7) it makes no sense to just present figure 1 without some description of it. 

8) All equations involved with a "hat" must be corrected. The "hat" is applied to the variable, but the indexes, for instance, in equation 2, it should be \hat{y}_lt. 

9). The format of all equations must be improved. They are not looking good enough and take too much space for some equations so that line space becomes uneven. 

10) It seems to be an error in equation 5. I don't understand what is "cov" there. It looks like the authors try to talk about the covariance, but they are expressed correctly. 

11) The readability of tables 2 and 4 must be improved. From what is presented, they are difficult to read. 

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

The paper aims at exploring the characteristics of time-space risks and their impact on premium rates, analyzing the relationship between the rates, and not just calculate rates in the agricultural insurance system in China. The Authors use uses aggregated data from the statistical yearbooks of the Henan, Hebei, Shanxi, Hunan, Jilin, Zhejiang, and Fujian provinces from 1989 to 2017.

Thanks to an appropriate research design and adequate and well-described methodological tools, Authors obtain very interesting results, that are connected with the context the technical background. If the quality of the presentation, the precise structure of the argumentation and the scientific soundness of the paper are confirmed, some doubts arise about the significance of the contents comparing the results. It is correct to say that the research helps to clarify the relationship between pure rate and security rate, but what is weird is that in the relation between government and market sector the risk liability seems such underestimated. Although the sustainable formula to better manage a catastrophe is a recent achievement for many social actors and in several productive sectors, it is considered as a bedrock of the contemporary systems. For a reader that knows the Chinese society thanks to reported analysis, even scientific, the Author’s research seems to have to be completed with a necessary explanation of the public-private dynamics in the Chinese agriculture that lead to this perfectible condition. So, it could be advisable to explain the reasons of the administrative and managerial government of the agriculture sectors that the Authors take for granted in the connection with the agricultural insurance model.

It’s recommended to pay attention to some minimal language and sentences revisions in the lines 107, 146, 178, 226, 385.

Author Response

Please see the attachment.

 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

This second version has been significantly improved, in particular, for the presentation. I feel that the conclusion part should be extended by addressing the impact or significance of this study on the sustainability of agricultural insurance, or the who agriculture in a broader sense. what is presented so far is the findings of the work, which is not sufficient. 

 

Also, in table 3, what does Pv stand for? it must be described clearly.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf