Small area estimation of household expenditure on insurance programs for minimizing the impact of natural disasters in West Java, Indonesia.

This article focuses on estimating household expenditures on insurance programs in West Java Province, Indonesia, to assess the community’s ability to pay for natural disaster-related insurance. Using data from the 2019 National Socio-Economic Survey (SUSENAS) and applying Small Area Estimation (SAE) with the Fay-Herriot model and logarithmic transformation, the study finds that average household insurance expenditures are low, ranging from 0.93% to 2.00% of total household expenditures, which is below the 5% benchmark observed in other developing countries. The research highlights the high disaster risk in West Java and suggests that improving insurance participation requires understanding its determinants, recommending further study in this area. The study also advocates for the use of SAE with logarithmic transformation to improve estimation accuracy for skewed data in small-area analyses.