MATHEMATICAL MODELING FOR CROP INSURANCE BASED ON SOCIAL SECURITY PRINCIPLE IN COMPUTING THE CROP PREMIUM

Adisak Pongpullponsak, Sukuman Sarikavanij and Thiradet Jiarasuksakun

Received October 2, 2009

Abstract

This work aims to study and construct a mathematical model for a crop insurance based on the social security principle in computing the crop premium and comparing to the government’s relief. The scope of the research is to study the premiums of several loss ratios depending on different severity rates and damage rates of crop after flood. The result shows that the more loss ratio, the less is the premium. For the damage rates ranging from 0.1 to 0.8, the estimating crop insurance premiums based on social security principle will be close to the amount of the government’s relief fund. On the other hand, if the damage rate is higher than 0.9, the crop insurance premiums based on social security principle will be much more than the amount of the government’s relief fund.

Keywords and phrases: severity rate, damage rate, loss ratio, crop premium, social security.