The problems of agriculture, rural areas and farmers have always been the livelihood issues of great concern to our government. As a newly established new social insurance model, agricultural insurance is a difficult point in the marketization of insurance industry in modern society. Agriculture is the basic industry in China. Since ancient times, there has been a saying that "scholars, agriculture, industry and commerce", and the development of agriculture is the long-term foundation of a country's development.
As the name implies, "agriculture, countryside and farmers" is the integration of farmers, agriculture and rural areas. Combined with the development of modern financial system, the state has introduced a new model of "insurance+futures" to adjust the price fluctuation of agricultural products, so as to ensure the quality of life and income level of farmers and minimize the impact of price fluctuation of bulk commodities on farmers' overall income.
What does "insurance+futures" mean?
"Insurance+futures" is to combine two kinds of wealth management products, so that insurance and financial derivatives can share risks and lock prices together. In fact, it is to lock or transfer the risk that farmers face commodity price fluctuations to others. "Insurance+futures" is a general term for the traditional agricultural product price insurance+OTC futures+OTC options model.
We use a numerical example to illustrate what the "insurance+futures" model means.
Suppose there is a fruit farmer, Xiao Guo, who specializes in planting apples and makes a living by selling them. However, due to the unstable market price of apple, it is often affected by various exogenous factors such as weather and substitutes. This situation has brought great trouble to Xiao Guo, because his income has become unstable and he often suffers huge losses.
The role of futures in the example of "insurance+futures"
After learning how to use financial derivatives, Xiaoguo found that his income could be better guaranteed.
Suppose that under normal circumstances, the market price of apples is 30,000 yuan per ton. However, according to his own experience, Xiaoguo feels that the market price of apples will drop this autumn, less than 30,000 yuan a ton. As long as he sells an apple futures contract with a delivery date of this autumn at the beginning of the year, the price will be 30 thousand yuan per ton, and the price will be locked. Prevent the price of apple from plummeting in the future and bring huge economic losses to yourself.
Suppose the price of apples really fell to 29,000 yuan per ton in the autumn market, but because Xiaoguo signed a futures contract in the early stage, the price was set at 30,000 yuan, which reduced the losses that Xiaoguo might have faced. Compared with those fruit farmers who didn't use derivatives, he earned 1000 yuan per ton of apples.
The Role of Insurance in the Example of "Insurance+Futures"
The principles of insurance and futures are different, but the purpose is unified. Xiao Guo can buy insurance in advance, and if the price of agricultural products falls, he can get compensation from the insurance company. If you add the put price in the above example and trade options, Xiaoguo may get double income. Even if the price rises to 3 1 000 yuan, Xiaoguo can make a profit at the ordinary price of 30,000 yuan. Therefore, the role of insurance is to provide the bottom line for price fluctuation losses, and futures trading is a speculative activity in addition to stabilizing prices. Which insurance company is stronger? I just sorted out the relevant content, hoping to help you: the latest list! Top Ten Insurance Companies in China