IPB University Professor Explains the Benefits of Mathematical and Actuarial Modeling for the Insurance Industry and Wildfire Mitigation

A Professor at the School of Data Science, Mathematics, and Informatics at IPB University, Prof Endar Hasafah Nugrahani, has revealed the important role of mathematical and actuarial modeling in various aspects, including for the insurance industry.

She stated that mathematical and actuarial modeling are the main foundations in the insurance industry and risk management. In fact, they can be applied in efforts to mitigate forest and land fires (karhutala).

According to Prof Endar, modeling in actuarial science is classified into three major groups: life models, non-life models, and financial and stochastic financial models.

“The applications of these models are very broad, ranging from mortality and morbidity models in life insurance, to claim frequency and severity models in general insurance,” she said.

She added that in the financial sector, financial models are applied in hedging strategies using combinations of call and put options. In addition, mathematical modeling also plays an important role in risk assessment processes, premium determination, and the development of new insurance products.

In the broader context of risk management, mathematical modeling is also used to predict and control disaster risks. One study showed that wildfires in Indonesia can be predicted by analyzing hotspots using satellite imagery.

“Not only in the general insurance sector, mathematical modeling is also very important in agricultural insurance, a vital program for an agrarian country such as Indonesia,” she explained.

Nevertheless, she acknowledged that the implementation of agricultural insurance still faces various challenges, particularly the low literacy among farmers regarding the importance of insurance protection. “Further support from the government and stakeholders is needed to expand outreach and education,” stressed Prof Endar. (AS) (IAAS/KMR)