The Promotion of Crop Insurance in ASEAN

through the Public and Private Partnership

PROGRESS REPORT
Stock-Taking Survey
On Crops Insurance Implementation in Indonesia
BACKGROUND
 HISTORY OF AGRI INSURANCE IN INDONESIA

2007-2009 2013 2012-2014 2015 2013-2015 2016 2017 2021

Agri Insurance Establisment of AUTP Pilot Project AUTP Nationwide AUTS/K Pilot AUTS/K nation Aquaculture AYII Pilot Project
Initiative Agri Insurance implementation Project wide insurance pilot
regulation ( implementation project
TYPE OF AGRI INSURANCE MARKETTED IN INDONESIA
 AGRI INSURANCE MARKETTED IN INDONESIA

CROPS INSURANCE
1. Rice Farming Insurance (AUTP) Indemnity based
1 2. Rice Farming Area Yield Index Index Based
Insurance (AYII)
Indemnity based, it is still
3. Maize Insurance new product and fully
commercial, then the sales
number very limited
LIVESTOCK INSURANCE
2 1. Live Stock Farming Insurance for
Indemnity based
Cattle and Bufflao (AUTS/K)

AQUACULTURE INSURANCE
3 1. Insurance for Small-Scale Fish Indemnity based
Farmers (APPTIK)
 TYPE OF AGRI INSURANCE MARKETTED IN INDONESIA
If Yes,
If Yes, When
Commercial Crops Insured
1. Crop Insurance Available (yes/no) (Which Year) Remarks
Scale, 'C', or (Please Specify)
Started ?
Pilot Scale, 'P'
Indemnity Based This type of insurance is
named Rice Farming
Multi-peril Crop Insurance Yes P 2015 Paddy Insurance (AUTP)
Index Based This type of insurance is
named Area Yield Index
Area Yield Index Based Yes P 2021 Paddy Insurance for Rice Farming
(AUTP-IHPPBA or AYII).
If Yes,
If Yes, When
Commercial Livestock Insured
2. Livestock Insurance Available (yes/no) (Which Year) Remarks
Scale, 'C', or (Please Specify)
Started ?
Pilot Scale, 'P'
Indemnity Based This type of insurance is
called Cattle and Buffalo
Named Peril Accident and
Yes P 2016 Cattle and Buffalo Livestock Insurance (AUTSK)
Mortality
If Yes,
If Yes, When Aquaculture
Commercial
3. Aquaculture Available (yes/no) (Which Year) Insured Remarks
Scale, 'C', or
Started ? (Please Specify)
Pilot Scale, 'P'
Indemnity Based This insurance is called
Named Peril Accident and Small-Scale Fish Farmer
Yes P 2017 Fisherman Fisheries Insurance (APPIK)
Mortality
Source : Jasindo.co.id
CROPS INSURANCES ACHIEVEMENT
 AUTP PRODUCT SALES

997,960.54 971,218.76 1,000,001.38

806,199.64
499,962.18
400.000.01 353,258.25
233,499.55

2015 2016 2017 2018 2019 2020 2021 2022

AUTP Sales by Area (ha)

2015 2016 2017 2018 2019 2020 2021 2022

401.408 917.294 1.550.389 1.297.036 1.380.357 1.367.678 619.700 572.982
Farmers Farmers Farmers Farmers Farmers Farmers Farmers Farmers
125 Districts 222 Districts 258 Districts 217 Districts 236 Districts 238 Districts 201 Districts 235 Districts
16 Province 18 Province 27 Province 24 Province 24 Province 28 Province 22 Province 27 Province

Total Insured Area : 5,262,101 ha Total Insured Farmers : 8,106,844 Farmes

Source : Directorate Agricultural Financing, Ministry of Agriculture, Indonesia

 AUTP CLAIM

150.28 136.70
97.50 Total Claim Amount : IDR 636.15 (in Billion)
81,90 67.78
66.56
21.94 8.51
Total Claim Area : 1,418.88 (Ha)
2015 2016 2017 2018 2019 2020 2021 2022
Claim Amount (in Billion)

2015 2016 2017 2018 2019 2020 2021 2022

3,657 11,094 25,047 13,660 22,784 16,256 11,298 1,418.88

ha ha ha ha ha ha ha ha

Source : Directorate Agricultural Financing, Ministry of Agriculture, Indonesia

 AYII PRODUCT SALES

During the pilot implementation in Karawang District, West Java, and Kendal Regency, Central Java, the
achievements of AYII products from 2021-2023 :

Total Insured Farmers: 1,416 Total Insured Area : 1,416 ha Total Collected Premium:

IDR 234 Million

Source : Ministry of Agriculture & Jasindo

 AYII CLAIMS

During the pilot implementation in Karawang District, West Java, and Kendal Regency, Central Java, the
Claim amount of AYII products from 2021-2023 :

Total Claim Area: 554 (Ha) Total Claim Amount: IDR 789.7 Million

Source : Ministry of Agriculture & Jasindo

 AUTS/K PRODUCT SALES

140,190 120,000
91,831 88,673 100,001
67,436
20,000

2016 2017 2018 2019 2020 2021 2022

AUTS/K Sales (Peaces)

2016 2017 2018 2019 2020 2021 2022

12.285 58.002 53.886 66.861 55.692 43.670 30.029
Farmers Farmers Farmers Farmers Farmers Farmers Farmers
102 Districts 250 Districts 250 Districts 280 Districts 275Districts 247 Districts 197 Districts
19 Province 27 Province 27 Province 28 Province 29 Province 28 Province 27 Province

Total Insured Farmers : 320,425 Total Insured Live-stock: 628,131

Source : Directorate Agricultural Financing, Ministry of Agriculture, Indonesia

 AUTS/K CLAIM
43.90
33.30 35.50 Total Claim Amount : IDR 163.4 (in Billion)
24.00
18.84
6.20 Total Livestock Claim : 21,178
1.66

2016 2017 2018 2019 2020 2021 2022

Claim Amount (in Billion)

Number if lives-tock (Pcs)

2016 2017 2018 2019 2020 2021 2022

4,329 4,370 5,546 3,292 2,692

782 Pcs 167 Pcs
Pcs Pcs Pcs Pcs Pcs
Source : Directorate Agricultural Financing, Ministry of Agriculture, Indonesia
FINDING
BASED ON ANALISYS THE FINDING ARE:

During the period from 2015 to 2020, there was a significant increase in the
number of rice crops farmers and livestock farmers registering for AUTP and
AUTS/K product. This phenomenon reflects an improved understanding
among farmers regarding the benefits of insurance.

Unfortunately, between 2020 and 2022, the upward trend in the

number of farmers and livestock farmers registering for AUTP and
AUTSK experienced a significant decline. This decline was attributed
to the impact of the Covid-19 pandemic during that period. In
response to the crisis situation, the government decided to cut the
budget for insurance premium assistance previously provided for
Covid-19 management.
During the AYII pilot project implementation, based on the data record that
the nationwide implementation for AYII product is highly challenging. This
difficulty arises from the imbalance between the total collected premiums and
claim amount. This situation highlights the need for a thorough evaluation of
the business model and implementation strategy of AYII
PRODUCT DESIGN
 AUTP PRODUCT DESIGN

Particulars Key Aspects of Design

1. Insured Crop Rice (Paddy Rice)
Insurance Type (Indemnity, or
2. Indemnity
Index)
If Named Peril Insurance, Risks
3. Flooding, Drought, Plant Pest Organisms
Covered
Planting Session : April– September, October-March
4. Insurance Period
(2 Planting session in a year)
5.1 Insured Value 6 million Rs/ha
5.2 Target for the Insured Value To compensate the production cost (not compensate the harvest value)
Compensation will be paid 100% (IDR 6 M) if the following conditions : 1)
Damage intensity ≥ 75%, 2) Damage area ≥ 75% in each paddy plot, 3) Rice
5,3 Payment Formula
growth minimum 10 days after planting (using the seedling method), and
4) Rice growth minimum 30 days after plating (using sowing method)
6. Premium Rate 3,10% (premium IDR 180,000) with 80% government subsidize
Subsidy (Yes or No, and the
7. Yes, subsidy to the Premium: 80% by the Central Government
Percent)
8. Target Loss Ratio, % 70% (the ratio of total payouts divided by the total collected premiums)
9.1 Loss Assessment (Method) Field survey
Loss Assessment (Who are in
9.2 Lost adjuster from Jasindo together with pests and diseases officer
Charge)
 AYII PRODUCT DESIGN

Particulars Key Aspects of Design

1. Insured Crop Rice (Paddy Rice)
2. Insurance Type (Indemnity, or Index) Index Area
If Named Peril Insurance, Risks
3. Flooding, Drought, Plant Pest Organisms
Covered
Planting Session : April– September, October-March
4. Insurance Period
(2 Planting session in a year)
5.1 Insured Value 6 million Rs/ha
5.2 Target for the Insured Value To compensate the production cost (not compensate the harvest value)
Compensation will be paid paid proportionally to the 100% (percentage of lost * IDR
5,3 Payment Formula 6 M) if the following conditions : the benchmark yield (index trigger) in an area is
higher than the actual yield (kw/ha) obtained by CCE (Crop Cutting Experiment)
6. Premium Rate 2,65% (premium amount IDR 160,000) with 80% government subsidize
7. Subsidy (Yes or No, and the Percent) Yes, subsidy to the Premium: 80% by the Central Government
8. Target Loss Ratio, % 70% (the ratio of total payouts divided by the total collected premiums)
One of the field sampling survey methods, Crop Cutting Experiment (CCE), shall be
9.1 Loss Assessment (Method)
conducted to get the average area-yield
Pest inspectors/ extension workers under Ministry of Agriculture in charge of the
9.2 Loss Assessment (Who are in Charge)
area conduct the CCE,
10.1 If Index type, Index Coverage Village level (about 2km x 2.5km area)

10.2 If Index type, Trigger Coverage Village level (about 2km x 2.5km area)
If Index type, ratio between the
10.3 85% (The Triggered Yield is set at 85% of the 5 Years Average Yield)
Trigger and Average Yield
DIFFICULTIES & IMPROVEMENT
 AUTP
Loss Assessment Method: Field Survey
Difficulties/ Challenges
1. In each district, Jasindo Branch faces a shortage of staff capable
of conducting loss assessment surveys. This has an impact on
expediting the claims process due to limited personnel
availability. Additionally, there are communication challenges, as
there is no designated contact person from Jasindo staff at the
district level responsible for reporting damages.
2. From the insurance company side (Jasindo), there are challenges
related to the distance of paddy field locations, which often are
too far, resulting in a significant operational cost burden.
Additionally, the limited number of survey staff poses a
challenge, and not every district has a Jasindo branch office.
3. From the farmers' perspective, their demands involve the need
for establishing a transparent process in assessing losses. There
are situations where differences in understanding arise between
farmers and the insurance parties regarding the extent of
damaged fields
4. On the other hand, according to Jasindo, farmers do not yet fully
understand the 75% damage threshold, leading to instances
where claim realizations do not align with the expectations or
hopes of the farmers.
Recommendations for Improvement
1. To solve the limitations in the number of Jasindo staff and delays
in field officers' readiness to assess losses, the utilization of
technology can be an effective solution. For example, through the
SIAP application owned by Jasindo, farmers can easily send
photos of damage proof through the application without the
need to physically visit the impacted locations. This can expedite
the loss assessment process without compromising the limited
staff availability. However, the most crucial aspect is the presence
of responsive customer service to address customer reports.
2. To solve the frequent complaints from farmers regarding non-
standard loss assessments, it is recommended that the
assessment process be formalized and strictly regulated in
insurance police. This will enhance the transparency level of the
process for the insured parties. Additionally, it is crucial to clearly
state the criteria for damage assessment, claims, as well as the
associated methods and procedures in insurance policies and
other contractual documents. The goal is to ensure that all
prospective farmers and insured parties have a thorough
understanding of the claims and loss assessment mechanisms.
 AUTP
Claim Procedures

Farmers Claim Procedure

Source : AUTP General Guideline, Directorate Agricultural Financing, Ministry of Agriculture, Indonesia
 AUTP
Difficulties/ Challenges
1. Referring to the above claims process, the claims procedure is
considered quite lengthy. From the farmers' perspective, this
results in the duration from reporting damage, field surveys by
Jasindo staff, to notification and payment of claims being too
long. This time-consuming process can have a negative impact on
customer satisfaction and the overall effectiveness of the
insurance program. Delays in claims processing can affect
farmers' perception of the insurance's reliability and exacerbate
the losses they may experience.
Recommendations for Improvement
1. Regarding the issues arising from the mentioned claims and
payment procedures, there is potential for simplification or
streamlining. For instance, the numerous steps can be condensed
to just two or three. For example, farmers can promptly report
damages to Jasindo's central office through an online system,
attaching the necessary form or proof of damage. Subsequently,
Jasindo's central office can directly assess, calculate the claim
amount, and confirm with the farmers. If both parties agree,
payment can be processed immediately. This simpler approach is
expected to enhance efficiency, reduce claims processing time,
and improve customer satisfaction.
 AYII
Loss Assessment Method: Crop Cutting Experiment (CCE)
Difficulties/ Challenges Recommendations for Improvement
1. During the registration phase, the District Department of Agriculture must attach 1. To solve the issues related to human
the location points to be used as CCE sample points. To select these points, ensure resources and high operational costs in
that the location has already been planted with rice. Therefore, field officers need implementing the CCE, it is recommended
to go to the field to confirm the presence of rice crops in the specified location. that the implementing parties AYII (MOA,
2. The survey using CCE method requires a significant operational cost to pay for and Jasindo) collaborate with the Central
human resources and survey equipment. This process involves a field team that Statistics Agency (BPS) to conduct the CCE
needs to manually harvest crops and meticulously measure the results. survey. BPS has personnel, equipment, and
systems already established for the
3. The CCE officer must have adequate training and experience. This expertise is implementation of CCE surveys.
necessary to ensure that the crop cutting and yield measurement processes are
carried out accurately and consistently. Additionally, CCE officer must conduct crop 2. To enhance farmers' understanding of AYII
surveys, even for the lands of farmers who are not enrolled in insurance. This is loss assessment method and the AYII
crucial to ensure that the data obtained reflects the actual conditions in the field, product comprehensively, a massive
including areas not covered by the insurance program. education and promotion process is
4. From the farmers' side, as this product types is index based insurance, there is a required. It is crucial to provide information
possibility that not all farmers will receive compensation, even if the registered to farmers regarding the advantages and
farmland experiences damage. This is especially true when the damage occurs only disadvantages of this index-based crop
in a small portion of the registered land, while the surrounding areas remain insurance.
unaffected.
 AYII CLAIM PROCEDURES

Farmers Claim
Procedures

Source : AYII General Guideline, Directorate Agricultural Financing, Ministry of Agriculture, Indonesia
 AYII
Difficulties/ Challenges
1. The CCE survey sometimes takes a considerable amount of
time due to the non-simultaneous harvesting schedules at
each CCE point. This delay can also impact the claims
process, making it longer.
2. Farmers are uncertain whether their paddy fields will receive
compensation through the compilation process of the CCE
survey, and they also lack clarity regarding the compensation
amount they will receive because Jasindo's compensation
calculation formula is proportionally.
3. Not all farmers are satisfied with the amount of claim
payments because, due to AYII is index based, there is no
guarantee that farmers experiencing severe damage will
receive full claim payments. The index-based system in crop
insurance often does not fully reflect the losses experienced
by each individual farmer.
Recommendations for Improvement
1. To streamline the lengthy AYII claims procedure, a
recommendation similar to the one for loss
assessment is a collaboration between Jasindo and
the Central Bureau of Statistics (BPS). BPS can
officially publish yield indices for a specific region,
and Jasindo can refer to the figures published by
BPS. Consequently, Jasindo can directly make
payments to farmers enrolled in the AYII program.
2. To enhance farmers' understanding of AYII claim
amount and the AYII product comprehensively, a
massive education and promotion process is
required. It is crucial to provide information to
farmers regarding the advantages and disadvantages
of this index-based crop insurance. Through a
comprehensive educational approach, farmers can
better comprehend how this product works, the
benefits it offers, and any potential limitations.