Publication Date


Series Number

99-WP 212


Shows that it is feasible to use exchange-based contracts as a substitute for the Standard Reinsurance Agreement. The authors analyze a Group Revenue Contract, which would allow producers to guarantee against reductions in county-level revenues. The insurance company would then purchase put options on an exchange-based revenue contract to protect against statewide revenue shortfalls. The analysis suggests that this reassurance tool would eliminate most though not all of the systemic risk associated with this product.