Improving mariculture insurance premium rate calculation using an information diffusion model

Mariculture is a well-known high-risk industry. However, mariculture insurance, which is an important risk management tool, is facing serious market failure. An important reason for this market failure lies in the unsound premium rate and pricing method. Due to a lack of long-term yield data, empirical rates are often adopted, but this adoption can lead to a high loss ratio. This paper provides an improved method for premium computation of mariculture insurance using an information diffusion model (IDM). An example of oyster insurance in China shows that, compared with the traditional pricing approach, the IDM can greatly improve the accuracy and stability of premium rate calculations, especially in cases of small samples.

Gerber-Shiu Function in a Discrete-time Risk Model with Dividend Strategy

In this paper, a discrete-time risk model with dividend strategy and a general premium rate is considered. Under such a strategy, once the insurer’s surplus hits a constant dividend barrier , dividends are paid off to shareholders at instantly. Using the roots of a generalization of Lundberg’s fundamental equation and the general theory on difference equations, two difference equations for the Gerber-Shiu discounted penalty function are derived and solved. The analytic results obtained are utilized to derive the probability of ultimate ruin when the claim sizes is a mixture of two geometric distributions. Numerical examples are also given to illustrate the applicability of the results obtained.

Probability of Default Bank Umum di Indonesia: Alternatif dalam Implementasi Sisitem Premi Deferensial

The Indonesian Deposit Insurance Corporation (LPS) initially imposed the flat rate premium system, the same premium rate for all banks, which is 0.2% of the total third party funds (DPK) of commercial banks. However; when there is a change in the value of deposits guaranteed, LPS needs to change from the flat rate premium system to the Differential Premium System. This study uses Probability of Default (PoD), derived from the Merton Model (1974), for each individual Commercial Bank in Indonesia in implementing the Differential Premium System as the mandate of Article 15 paragraph (1) of the Law. Thus, each individual bank will pay a premium in accordance with the probability of default to LPS. This study finds that the average of probability of default of all commercial banks in the period 2002-2014 reaches 57.12%. Bank that has the smallest average Probability of Default (PoD) is Bank 151Â with a PoD of 14.10% and an AA category rating. The second position is Bank 427 with a PoD of 18.20% and a rating of A. While the third position is Bank 14 with a PoD of 18.70% also with a rating of A. This study finds that the Differential Premium System in Indonesia can be implemented, given that LPS revenue will not be reduced much or at least close to the flat rate premium system, when LPS imposes the Differential Premium System.

THE INFLUENCE OF REINSURANCE RATE, LOAN INTEREST RATE AND BANK'S FEE BASED INCOME AGAINST THE PREMIUM RATE ON CREDIT LIFE INSURANCE (CASE STUDY: CREDIT LIFE INSURANCE’S POLICY HOLDER OF PT INDOSURYA LIFE IN 2018)

This research has purposes to learn further about the impact of reinsurance rates, loan interest and fee-based income towards premium rates on credit life insurance. The unit of analysis was 50 credit life insurance policy holders at PT Indosurya Life throughout 2018. The independent variables that used in this research are reinsurance rates, loan interest and fee based income. While the dependent variable is premium rate on credit life insurance. The sample collected method was taken by saturated sampling. Researchers took the entire population as a sample where the number of samples used were 50 policy holders from credit life insurance which used premium rates and types of effective loan interest for 40 years of age with 5 years of insurance period. The analytical method used was multiple regression analysis and hypothesis test which is done by t-test. And according to the rdata analysis result, loan interest and fee-based income had a positive and significant affect towards credit life insurance's premium rates. Meanwhile, the reinsurance rate variable did not related to credit life insurance's premium rate. It is very recommended to PT Indosurya Life to increase the premium rate on its credit life insurance, so that will increase its Fee Based Income aswell.

Determination of Critical Productivity Level on Cluster-Based Area of Rice Crop Insurance in Java

<strong>Indonesian</strong><br />Kesenjangan tingkat produktivitas padi di Indonesia cukup besar yang di antaranya dipengaruhi oleh luasnya wilayah pertanaman. Hal ini berdampak pada desain dan penerapan model Asuransi Usaha Tani Padi (AUTP) berbasis produktivitas. Perluasan klaster pada tingkat provinsi diperkirakan dapat mengurangi keragaman produktivitas di tingkat wilayah kota/kabupaten sebagai risiko dasar pemanfaatan skema AUTP berbasis klaster. Klaster, sebagai wilayah atau zona, diperlukan untuk menentukan indeks kritis produktivitas yang akurat dalam rangka penghitungan tingkat premi yang tepat. Kajian ini bertujuan untuk menentukan tingkat produktivitas kritis pada lahan padi yang menerapkan skema AUTP. Kajian ini menggunakan analisis statistik dengan pendekatan batas bawah <em>Two Sigma</em> yang dapat dianggap sebagai batas produktivitas kritis untuk setiap klaster. Teknik ini memberikan persentase yang rendah atas klaim yang terjadi, serta ekspektasi dan simpangan baku dari risiko dasar kerugian. Tarif premi murni yang diperoleh adalah Rp85.191,18, hampir 2,5 kali lipat lebih kecil dibandingkan dengan menggunakan teknik lain sebagai batas poduktivitas. Hasil kajian ini mengungkapkan bahwa penggunaan skema berbasis klaster lebih baik dari skema berbasis provinsi, sebagaimana ditunjukkan oleh nilai TVaR. Kajian ini menyarankan agar Kementerian Pertanian dapat merancang model AUTP berbasis produktivitas berdasarkan klaster dengan setiap klaster memiliki nilai indeks produktivitas kritis yang berbeda untuk menetapkan tingkat premi yang dikenakan.<br /><br /><br /><strong>English</strong><br />There is a large gap in productivity of paddy in Indonesia which is, among others affected by the area size of crop planting. This condition should influence the design and application model of the rice crop insurance scheme. Developing clusters under the province level is recommended to reduce the heterogeneous productivity as basis risk within regencies/municipalities in improving the area yield index of crop insurance policy in Indonesia. Clusters, as the zone, are necessary to determine accurate critical yield index leading to a more precise premium rate making. This study aims to determine critical productivity level on rice crop insurance area. This study applied statistical analysis using the lower bound of Two Sigma as a critical yield for each cluster. This technique provides a small percentage of claim, and the expectation and standard deviation of basis risk loss. The pure premium rate obtained from the analysis is IDR85,191.18, that is almost 2.5 times less than using other methods as trigger productivity. The analysis result emphasized that the use of the cluster-based scheme is better than the province-based as shown by TVaR value. The study suggests that the Ministry of Agriculture could design the area yield index based on clusters as each cluster will have a different critical productivity index with adjusted premium rate value.

Fair Insurance Premium Rate in Connected SEIR Model under Epidemic Outbreak

In this paper, we aim to determine an optimal insurance premium rate for health-care in deterministic and stochastic SEIR models. The studied models consider two standard SEIR centres characterised by migration fluxes and vaccination of population. The premium is calculated using the basic equivalence principle. Even in this simple set-up, there are non-intuitive results that illustrate how the premium depends on migration rates, the severity of a disease and the initial distribution of healthy and infected individuals through the centres. We investigate how the vaccination program affects the insurance costs by comparing the savings in benefits with the expenses for vaccination. We compare the results of deterministic and stochastic models.

Research on Revenue Insurance Premium Ratemaking of Jujube Based on Copula-Stochastic Optimization Model

During the process of jujube planting, there are not only natural risks caused by natural disasters but also market risks caused by price factors. In the study, firstly, wavelet analysis method was used to stabilize the jujube yield per unit area and the jujube price from 1997 to 2018 in Aksu region, Xinjiang, China. Secondly, EasyFit software was used to fit the distribution functions of yield per unit area and price, respectively. Thirdly, the optimal Copula function which connects the marginal distribution functions and its joint distribution function was selected with the principle of “the minimum square distance from the empirical Copula function.” Finally, taking the premium rate and the insurance amount as two decision variables, the farmer’s risk minimization as the objective function, around the four constraints of functions and role of insurance, the nonspeculative nature of insurance, the sustainability of insurance, and the moral hazard factors and the farmers’ willing to participate in insurance, the Copula-stochastic optimization model was set up to determine the premium rate of jujube revenue insurance in Aksu region.

Research on the factors influencing the premium rate of the Inherent Defects Insurance

This paper introduces the composition of the premium rate of Inherent Defects Insurance, and analyzes the the factors influencing the premium rate of the Inherent Defects Insurance.