A spatial econometric approach to designing and rating scalable index insurance in the presence of missing data
Review statusPeer Review
MetadataShow full item record
Woodard, J., Shee, A. and Mude, A. 2016. A spatial econometric approach to designing and rating scalable index insurance in the presence of missing data. Geneva Papers on Risk and Insurance – Issues and Practice, 41(2):259-279
Permanent link to this item: http://hdl.handle.net/10568/76923
Index-Based Livestock Insurance has emerged as a promising market-based solution for insuring livestock against drought-related mortality. The objective of this work is to develop an explicit spatial econometric framework to estimate insurable indexes that can be integrated within a general insurance pricing framework. We explore the problem of estimating spatial panel models when there are missing dependent variable observations and cross-sectional dependence, and implement an estimable procedure which employs an iterative method. We also develop an out-of-sample efficient cross-validation mixing method to optimise the degree of index aggregation in the context of spatial index models.