AIR improves multiple peril crop insurance model for China

Catastrophe risk modeling firm AIR Worldwide has updated its multiple peril crop insurance (MPCI) model for China.

The model supports probabilistic assessments for five newly modeled crop lines of business and a newly modeled sub-peril. The update also includes a new livestock module that adds six additional lines of business and two new sub-perils.

Jeff Amthor, assistant vice president at AIR Worldwide, said: “The MPCI Model for China captures the severity, frequency, and location of drought, flood, wind, frost, and heat events nationwide, covering over 90 percent of the weather-related crop losses.”

AIR developed its MPCI model for mainland China in 2011 and has updated it several times to keep it current with the fast-changing Chinese agricultural insurance market. It is available in the 2020 release of the Touchstone Re catastrophe risk management system.

The AIR MPCI model for China leverages a 10,000-year stochastic catalog that contains losses reflecting the most recent assumptions regarding policy conditions.

The stochastic catalog includes the addition of the heat sub-peril for all crops and the weather and disease sub-perils for livestock.

China is the leading producer of chickens, pigs, goats, ducks, and sheep, and is the fourth-largest producer of cattle in the world by head. Livestock are susceptible to extreme weather events as well as disease, which can result in extreme livestock losses. An outbreak of African swine fever hit China in 2018, resulting in a loss of half of China’s 400 million pigs, or 40 percent of the world’s total agricultural pig population, as of the first half of 2020.