Determination of Premium Price for Rice Crop Insurance in Gorontalo Province Based on Rainfall Index with Black Scholes Method

Ana Nadiyyah (Mathematics Study Program, Faculty of Mathematics and Natural Sciences, Gorontalo State University, Indonesia)
Emli Rahmi (Mathematics Study Program, Faculty of Mathematics and Natural Sciences, Gorontalo State University, Indonesia)
Salmun K. Nasib (Statistics Study Program, Faculty of Mathematics and Natural Sciences, Gorontalo State University, Indonesia)
Agusyarif Rezka Nuha (Mathematics Study Program, Faculty of Mathematics and Natural Sciences, Gorontalo State University, Indonesia)
Nisky Imansyah Yahya (Mathematics Study Program, Faculty of Mathematics and Natural Sciences, Gorontalo State University, Indonesia)
La Ode Nashar (Statistics Study Program, Faculty of Mathematics and Natural Sciences, Gorontalo State University, Indonesia)

Pattimura International Journal of Mathematics (PIJMath)
Vol 3 No 2 (2024): Pattimura International Journal of Mathematics (PIJMath)

With its complex topography, Gorontalo Province experiences significant rainfall variations that impact the agricultural sector, particularly rice crops. These variations can cause substantial losses for farmers. One way to address uncertain probabilities caused by rainfall is through agricultural insurance. This research aims to calculate the value of agricultural insurance premiums based on the rainfall index. The Black- Scholes method is used to calculate the premiums, while the Burn Analysis method is employed to determine the rainfall index. The research results classify the rainfall index values in Gorontalo Province into 7 (seven) percentiles. The lowest is at the 20th percentile, with 17.37 mm and a premium value of IDR 1,574,190, while the highest is at the 80th percentile, with 17.65 mm and a premium value of IDR 2,154,574. This indicates that the higher the rainfall, the greater the premium to be paid.