The crop insurance has been initially introduced in 2001 for an apple & pear orchard and is a mean to stabilize & to protect the management of farmer, and it has helped many victim farmers of disaster to comeback through this insurance system. Especially, the paddy rice has been included as an insured item in 2009, and this system has performed as a management stabilization mean of farmer with KRW 10 Billion of insurance money being received. However, the buying ratio of crop insurance has been substantially low in comparison with the fruit tree item such as an apple or pear, the increase in buying ratio of crop insurance has to be achieved in order for the crop insurance to be a practical management stabilization device of paddy rice farmer.
Therefore, this thesis has analyzed the determination factor for the crop insurance of rice focused on "paddy rice" which takes the absolute part of Korean agriculture industry. The determination factor for the crop insurance of paddy rice farmer has been analyzed in classification on each farmer & region, and the regional analysis has been used with multiple regression model and the analysis on each farmer has been used with integrated probit model & random effects probit model. Through these models, the influence of characteristics of farmer such as income, gender, age, and degree of education of farmer on buying the crop insurance have been analyzed. The major analysis results are as follows.
At first, the crop insurance for rice has been expanded every year in scale such as number of insured farmer, insured amount & area after its implementation in 2009. Furthermore, the insurance money received by the farmer for 5 years from 2009 has been reached to KRW 100 Billion with the average loss ratio of 197%. In comparison with the paid insurance premium by insured farmer, the received insurance money has exceeded 97% more than what they have paid, and this supports the claim of crop insurance being a stabilization measure to prepare damages caused by natural disaster.
At second, the analysis result of determination factor for buying the crop insurance according to regional characteristics, has shown that the minimum/maximum temperature, possibility of weather disaster, ratio of a weak class in farmers, and sales price of grain have affected on the buying ratio of crop insurance in a statistically significant level. In consideration of relationships among these variables, the minimum temperature, possibility of weather disaster, and ratio of a weak class in farmers have shown a positive relationship with the buying ratio, but the maximum temperature and sales price of grain have shown a negative relationship to lower the buying ratio.
At third, it has shown in the analysis result of determination factor for buying the crop insurance of paddy rice farmer through integrated probit model & random effects probit model that the higher age, degree of education, cultivated area, and amount of received insurance money and the lower in a number of family member have revealed the higher possibility to buy the crop insurance in the integrated probit model. While the random effects probit model has shown a higher possibility to buy the crop insurance as the higher age, cultivated area, and amount of received insurance money.
Based on these analysis results, the implication can be suggested as follows. At first, the weather factor of region has been confirmed to have a correlation with buying the crop insurance based on the analysis result of determination factor for buying the crop insurance according to regional characteristics. Especially, the temperature during September & October has a high correlation with their income, so that the paddy rice farmer has been reacted sensitively. Since the current compensation scope of crop insurance has been extensive yet unrealistic, the more detailed compensation scope such as damages caused by fluctuated temperature in each month and disease & insect damage shall be considered through these analysis results.
At second, a possibility of weather disaster has been applied as a factor to increase the average buying ratio of crop insurance of region. On a contrary, the region with low possibility of weather disaster has been shown a low motivation to buy the insurance so separate measures such as no-claim discount for farmers in the region with low possibility of weather disaster shall be considered.
At third, it has been confirmed based on the analysis result of determination factor for buying the crop insurance according to the characteristic on each farmer that the larger cultivated area is, the higher possibility of buying the crop insurance has been. This is mainly caused by the higher possibility of being exposed to disaster in a large cultivated area, and it has been a big problem since the scale of domestic paddy rice farmer has been mostly small. Especially, the natural disaster is directly connected with the living of small farmers, so all farmers who cultivate with relevant item regardless of cultivated area & insurance premium shall be able to buy the insurance without any special restrictions. Furthermore, a class of people without the capability of paying the premium voluntarily such as a beneficiary of national basic livelihood security system or a destitute people, shall be supported by active intervention of government in a perspective of disaster relief in order to prevent the blind spot of crop insurance.
At fourth, it has been confirmed that the possibility of buying the disaster insurance has been decrease when a number of family member has been larger. This is mainly caused by the higher burden to a farmer who has a low annual average income with the higher living expense due to the more members of family. Therefore, it is necessary to have a support system of government such as incentives for buying the insurance in accordance with the number of household members.
At fifth, the possibility of buying the disaster insurance has been increased as the degree of education of farmer has been higher. This is mainly caused by the relatively easy access to the information & knowledge for the disaster insurance as well as better recognition of disaster with the higher degree of education. Of course, the degree of education of farmer can not be raised artificially, but the buying ratio of insurance can be raised through the reinforced education & promotion for the insurance system or the preparation of disaster.