We measured the effects of unit change in loss ratio evaluation on insurance premium rate and
agent commission fee in Korean crop insurance. For the study, empirical data of apple and pear
insurances and rice insurance from 2011 to 2018 were obtained from Agricultural Policy Insurance &
Finance Service. Ten years of simulation with Copula method was performed to produce insurance
premium rate, which was used for the calculation of cost saving in commission fee of eight years
during the analytic periods.
The results showed that the premium rate discount ranged from 2.06 percentage in pear with perils
coverage to 30.4 percentage in pear with all risks coverage. The cost saving in commission fee during
the eight years ranged from 511 million won in pear with all risks coverage to 10,442 million won
in rice. The cost saving in pear insurance was higher in peril coverage than in all risks coverage.