Determination of risk-based for rice farmers using the nonparametric Bayesian method

Abstract

The Paddy Farmers Business Insurance or Asuransi Usaha Tani Padi (AUTP) is one of the insurance programs organized by the Indonesian government to improve the welfare of rice farmers in Indonesia. In this study, we formulated a premium estimation model of risk-based AUTP insurance. The method used was the Bayes method with a nonparametric approach. The data used was the AUTP claim data in Aceh province. The determination of the premium has been done by providing a settlement algorithm based on past data for two periods. From the analysis conducted, it was found that the Bayesian premium obtained is still not in accordance with what is currently applied by the government, especially in the area of study.