Crop Insurance Model Based on Maximum Daily Rainfall and Maximum Daily Temperature Index

A loss insurance model of risk for agricultural commodities that considers maximum daily rainfall and maximum daily temperature is introduced in this paper. This model requires bivariate distribution of maximum daily rainfall and maximum daily temperature in a specific region. Characteristics of particular agricultural commodity is also needed in the region where the two variables are being insured. The bivariate distribution and commodity characteristics are combined to obtain exit. exit is a benchmark value that causes the total crop failure and gives full benefit claim to policyholder. The case study was demonstrated by using data on maximum daily rainfall and temperature in Dramaga Bogor from September to December during 38 years (1984-2021). Data was collected from Jawa Barat Climatology Station. Frank Copula is better to represent the bivariate distribution of data. Furthermore, two scenarios had given the premiums as IDR 2 482 925 per hectare and IDR 1 495 660 per hectare. This crop insurance model based on maximum daily rainfall and maximum daily temperature index could be the basis for the next developing of crop insurance model.