Design of Wheat Drought Index Insurance in Shandong Province

Agro-meteorological index insurance can transfer the risks in the agricultural production, reduce the farmers' economic losses, and promote a sustainable development of agricultural production. However, traditional agricultural insurance with a single rate has the problems of the presence of adverse selection, the difficulty of determining premium rates and assessing the claims. As a new agricultural insurance product, weather index insurance, is based on the objective meteorological data, and it can determine the fee rates, make up for the damages, lower costs and make the claims more efficient .Thus, the paper establishes the wheat drought index which combines the precipitation anomaly percentage indicators with the growth characteristics of wheat in Shandong Province. Then, according to the meteorological data and wheat yields date of 17 cities of Shandong Province in 1981-2010, the paper analyzes the relationship between wheat drought and wheat production rate. Finally, this paper designs the wheat drought index insurance in Shandong Province which can provide a reference for the research and development of the policy agricultural insurance.