Demand analysis of flood insurance by using logistic regression model and genetic algorithm

Sidi, P. and Mamat, M.B. and Sukono, . and Supian, S. and Putra, A.S. (2018) Demand analysis of flood insurance by using logistic regression model and genetic algorithm. In: International Conference on Operations Research 2017, 12 Oct 2017, Tangerang Selatan, Indonesia.

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Abstract

Citarum River floods in the area of South Bandung Indonesia, often resulting damage to some buildings belonging to the people living in the vicinity. One effort to alleviate the risk of building damage is to have flood insurance. The main obstacle is not all people in the Citarum basin decide to buy flood insurance. In this paper, we intend to analyse the decision to buy flood insurance. It is assumed that there are eight variables that influence the decision of purchasing flood assurance, include: income level, education level, house distance with river, building election with road, flood frequency experience, flood prediction, perception on insurance company, and perception towards government effort in handling flood. The analysis was done by using logistic regression model, and to estimate model parameters, it is done with genetic algorithm. The results of the analysis shows that eight variables analysed significantly influence the demand of flood insurance. These results are expected to be considered for insurance companies, to influence the decision of the community to be willing to buy flood insurance.

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