Income allocation of ‘insurance + futures’ with risk modified Shapley value method

ABSTRACT

‘Insurance + futures’, a new agricultural cooperation mode in China, fails to guarantee a fair and reasonable income allocation among core stakeholders which hinders the rapid promotion of this pilot project. By using Shapley value method based on the idea of ‘income allocation matches contribution’, this article suggests an income allocation scheme for farmers, insurance institutions and futures institutions. After using AHP and fuzzy mathematics evaluation method to calculate risk sharing coefficients for three parties to get modified parameters, a risk modified income allocation scheme is developed. Compared with the income allocation scheme based on equal risk sharing, this scheme can fully meet the interest demands of three parties and provide reference for the sustainable development of the mode.

KEYWORDS:

• ‘insurance + futures’ mode
• Shapley value method
• risk sharing
• income allocation

JEL CLASSIFICATION:

• G22
• G20

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Because AHP and fuzzy comprehensive evaluation method are used to measure the risks, there is no need for specific quantitative risk statistics, so the statistical characteristics of these variables are not shown.

² CBRC: China Banking Regulatory Commission; CSRC: China Securities Regulatory Commission.

³ The respondents are from Taishan Property Insurance Company’s agriculture insurance department and CITIC Futures.

Additional information

Funding

This work is funded by the teaching reform projects in Shandong University of Finance and Economics titled as ‘Research on the teaching mode innovation of insurance business practice under cooperation of Industry-University-Research’ [jy202005].