TY - GEN
T1 - System Dynamics Approach for Financial Strategy Assessment of Cattle Insurance Program
T2 - 4th Asia Pacific Conference on Research in Industrial and Systems Engineering: Building Business Resilience to Face the Challenge in Pandemic Era, APCORISE 2021
AU - Tridoyo,
AU - Moeis, Armand Omar
AU - Komarudin,
N1 - Funding Information:
The support of Group of Insurance of Micro Agriculture and Governmental Programs Jasindo is deeply appreciated
Publisher Copyright:
© 2021 ACM.
PY - 2021/5/25
Y1 - 2021/5/25
N2 - Livestock is one of the sectors contributing to economic development, including job creation, poverty alleviation, and improving rural communities' revenue. Nevertheless, in conducting their business, farmers face risks, including climate changes, livestock accidents, diseases, and emergency slaughtering that reduce their income. Due to farmers' enormous risks, Indonesia's government issued a law of protection and farmers' empowerment (Law No. 19 of 2013), stating that agricultural insurance is one of the seven farmer protections. Cattle Insurance Program is one of the agricultural insurance forms of protection for farmers who experience losses in their livestock cultivation business by receiving compensation to be used as capital. However, this program has not provided an economical business scale for the insurance company that the government appoints. It can be seen from the high loss ratio of more than 200% on average since the program was first implemented in 2016, and this can affect the sustainability of the cattle insurance program. This research aims to develop a conceptual model that can be used to understand the structure and the causality between elements using a system dynamics approach. This model shows that loss ratio influencing factors are premium tariff, sum insured, the number of cattle participating in the program, a claim ratio, compensation, and deductible. This study results can be used to develop financial strategies and scenarios to decrease the loss ratio.
AB - Livestock is one of the sectors contributing to economic development, including job creation, poverty alleviation, and improving rural communities' revenue. Nevertheless, in conducting their business, farmers face risks, including climate changes, livestock accidents, diseases, and emergency slaughtering that reduce their income. Due to farmers' enormous risks, Indonesia's government issued a law of protection and farmers' empowerment (Law No. 19 of 2013), stating that agricultural insurance is one of the seven farmer protections. Cattle Insurance Program is one of the agricultural insurance forms of protection for farmers who experience losses in their livestock cultivation business by receiving compensation to be used as capital. However, this program has not provided an economical business scale for the insurance company that the government appoints. It can be seen from the high loss ratio of more than 200% on average since the program was first implemented in 2016, and this can affect the sustainability of the cattle insurance program. This research aims to develop a conceptual model that can be used to understand the structure and the causality between elements using a system dynamics approach. This model shows that loss ratio influencing factors are premium tariff, sum insured, the number of cattle participating in the program, a claim ratio, compensation, and deductible. This study results can be used to develop financial strategies and scenarios to decrease the loss ratio.
KW - Cattle Insurance Program
KW - Conceptual Model
KW - Financial Strategy
KW - Loss Ratio
KW - System Dynamics
UR - http://www.scopus.com/inward/record.url?scp=85143893788&partnerID=8YFLogxK
U2 - 10.1145/3468013.3468638
DO - 10.1145/3468013.3468638
M3 - Conference contribution
AN - SCOPUS:85143893788
T3 - ACM International Conference Proceeding Series
SP - 443
EP - 447
BT - Proceedings of the 4th Asia Pacific Conference on Research in Industrial and Systems Engineering
PB - Association for Computing Machinery
Y2 - 25 May 2021
ER -
