Crisis Management in Catastrophe Insurance: Applying Bühlmann-Straub, Subsidy, and Cross-Subsidy Methods in Indonesia

Selecting an appropriate method to determine natural disaster insurance premiums, a key aspect of crisis management. The Bühlmann-Straub method, a widely used non-parametric approach, assists in this determination. This study uses data on natural disaster risk indices, Regional Gross Domestic Product at Constant Prices (RGDPCP), and the number of disaster events in each Indonesian province to explore subsidy and cross-subsidy methods. Identifying the right method and parameters requires thorough observation due to numerous influencing combinations. Comparative analysis using percentage change and difference testing reveals that the best approach involves provincial classification by risk index ratio, subsidy amount by the number of disaster events, and subsidy increment factor by RGDPCP ratio ($\mathbf{r}, \mathrm{n}, \mathrm{s}$). This method aligns with the definition of subsidies, providing varied subsidies across provinces and yielding smaller errors than actual data. By optimizing insurance premiums, this study enhances crisis management, ensuring better support for disaster-stricken regions and more efficient allocation of resources to mitigate the financial impact of natural disasters.