Precaution Strategy of Moral Hazard Practice in Agricultural Insurance in Indonesia: An Approach of Soft Systems Methodology

Authors

  • Rahmat Fadhil Universitas Syiah Kuala (USK) https://orcid.org/0000-0002-8124-1599
  • Muhammad Yasir Yusuf Ar-Raniry State Islamic University (UIN AR-RANIRY)
  • T. Saiful Bahri Universitas Syiah Kuala (USK)
  • Hafiizh Maulana Ar-Raniry State Islamic University (UIN AR-RANIRY)
  • Fakhrurrazi Fakhrurrazi RISPRO-LPDP

DOI:

https://doi.org/10.7201/earn.2021.02.04

Keywords:

Islamic agricultural insurance, livestock insurance, Moral hazard, rice crop insurance, soft systems methodology

Abstract

This paper uses Soft Systems Methodology (SSM) to formulate strategies to prevent moral hazard acts in agricultural insurance in Indonesia. Agricultural insurance takes place, mainly, through Rice Crop Insurance and Cattle Insurance. Generally, the strategies that can be performed to minimize moral hazard practice in agricultural insurance programs are: developing the capacity of human resources, improving field communication, enforcing penalties, institutional strengthening, and adding new products through Islamic agricultural insurance. Specifically, this paper proposes that the prevention of moral hazard practices can be done by implementing Islamic agricultural insurance systems with the concept of risk-sharing instead of risk transfer.

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Author Biographies

Rahmat Fadhil, Universitas Syiah Kuala (USK)

Dept. of Agricultural Engineering

Muhammad Yasir Yusuf, Ar-Raniry State Islamic University (UIN AR-RANIRY)

Faculty of Islamic Economics and Business

T. Saiful Bahri, Universitas Syiah Kuala (USK)

Dept. of Agribusiness, Faculty of Agriculture

Hafiizh Maulana, Ar-Raniry State Islamic University (UIN AR-RANIRY)

Faculty of Islamic Economics and Business

Fakhrurrazi Fakhrurrazi, RISPRO-LPDP

Research Assistant

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Published

2021-12-21

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