Precaution strategies against asymmetric information in agricultural insurance

Agricultural insurance is the powerful guarantee for modern agriculture development and is also one of major policies which benefit the farmers. But the asymmetric information in agricultural insurance has considerably hindered the development of China´s agricultural insurance. This paper discusses the concrete manifestation of the asymmetric information in agricultural insurance, by using two game models of adverse selection and moral hazard, then puts forward series of precaution strategies against asymmetric information from the perspective of optimizing the policy design: (1) building multi-level insurance rate system; (2) setting earnest money clause; (3) adding the additional loss rate into agriculture insurance rate; (4) using the “risk-sharing” principle.