The AIR Multiple Peril Crop Insurance (MPCI) model uses detailed weather observations over the course of past growing seasons along with the resulting crop yields to develop a current crop yield probability distribution for each modeled crop in each county, which is more accurate than other modeling approaches.
The AIR crop event catalog reportedly captures the yield correlations between crops and between neighboring counties to capture the effects of widespread weather events, such as droughts.
Oscar Vergara, senior account executive of AIR Worldwide, said: The AIR model addresses significant weaknesses in traditional crop models. It accounts for the effect of weather on crop yields, technology improvements and commodity price fluctuations, changes in the policy types and their market penetration, and changes in the SRA program to provide the most accurate probabilistic estimate of potential losses. AIR’s crop model results are used by leading reinsurers to analyze reinsurance submissions from the MPCI program.