Fire insurance rates cut by up to 60%<\/p>\n
JAKARTA (JP): Amid concerns over the continuing outflow of
\nfunds to foreign firms for fire insurance services, local
\ninsurance firms have cut fire risk premium rates by 50 to 60
\npercent, to a new range of 0.045 percent to 2 percent per annum.<\/p>\n
The chairman of the Indonesian Insurance Council, B. Munir
\nSjamsoedin, said yesterday that the tariff war among local
\ninsurance firms has been so intense the council decided to adjust
\nexisting fire rates.<\/p>\n
\"This situation is closely related to the international
\ninsurance market, which is currently oversupplied. Some foreign
\ninsurers, therefore, entered the local market by offering more
\ncompetitive rates to customers,\" Munir said.<\/p>\n
Consequently, Munir added, many local customers insure their
\nhouses, apartments, office buildings and other premises with
\nforeign insurers.<\/p>\n
He noted that a number of local insurance firms and securities
\nbrokers offered brokerage services to foreign insurers to offer
\nproducts to local customers.<\/p>\n
\"If we don't address this problem, I'm afraid our general
\ninsurance industry will reenter a process of self-destruction, as
\nhappened in the early 1990s,\" Munir said.<\/p>\n
However, he declined to elaborate on the total possible amount
\nof the premiums paid by local customers to foreign insurers,
\nsaying that his council does not have the figure.<\/p>\n
All insurance firms incorporated in Indonesia are
\nautomatically members of the council. It established a premium
\nrate reference for all insurance firms in 1993 under an inter-
\ncompany agreement, when the Ministry of Finance abolished the
\ngovernment-set insurance premium rates.<\/p>\n
Frans Sahusilawane, chairman of the council's ad-hoc committee
\nestablished to review fire risk premium rates, said the cutting
\nof premium rates by 50 to 60 percent is expected to return local
\ncustomers to local insurers and stabilize the current oversupply
\nof fire risk insurance services.<\/p>\n
He explained that the new tariffs cover residential buildings,
\nincluding apartments, office buildings, hotels and other
\nbuildings.<\/p>\n
He said the new rates are expected to attract more people to
\nenter the risk insurance industry by insuring their homes against
\nfire.<\/p>\n
The new rates will be effective on June 1, and all insurance
\ncompanies incorporated in Indonesia are required to abide by the
\nnew rates.<\/p>\n
Under the new rate structure, the lowest annual premium rate
\nis 0.045 percent for fire insurance on residential houses under
\nthe first category of construction quality, and the highest rate
\nis 2 percent for night clubs, dance halls, ball-rooms,
\ndiscotheques, bars and billiard halls with the lowest
\nconstruction quality.<\/p>\n
Meanwhile, the fire insurance rates for hotels, motels, inns
\nand the like, certified below three-star classification, range
\nfrom 0.25 percent to 0.5 percent, depending on the construction
\ntype of the buildings, while the rates for hotels with three
\nstars or higher range from 0.2 to 0.4 percent.<\/p>\n
High-rise buildings not exceeding six stories have fire
\npremium rates of 0.11 percent to 0.27 percent per annum, while
\nthose from six to 18 stories have 0.12 percent to 0.31 percent
\nrates, and those exceeding 18 stories have 0.13 percent to 0.32
\npercent.<\/p>\n
Motor vehicle repair shops and service stations have 0.5
\npercent to 0.12 percent premium rates per annum.<\/p>\n
Dwelling houses floating on rivers or sea shores, regardless
\nof their construction class, have an annual premium rate of 0.3
\npercent. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fire-insurance-rates-cut-by-up-to-60-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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