AAUI to clarify 'all risks' clauses
Fitri Wulandari, The Jakarta Post, Jakarta
The Association of Indonesian General Insurance (AAUI) has promised to hold talks with the Council of Indonesia Insurance (DAI) to redefine the term 'all risks' as it relates to insurance policies in a bid to clear up widespread public confusion.
"We think that the term (all risks) need to be clarified..so we will try to discuss it with DAI's technical commission," Arizal E.R of the AAUI told The Jakarta Post on Wednesday.
He said that insurance companies might not have provided a detailed explanation of the term to their customers.
"Insurance companies are not fully aware that the term might cause confusion among their clients," he said.
Arizal said it was possible the association would establish a standard definition to remove the current uncertainty.
DAI top officials, meanwhile, could not be reached for comment.
In the aftermath of recent floods, many insurance policy holders were disappointed to learn that their 'all risks' policies did not cover flood damage.
Many consumers interpret 'all risks' literally and assume such policies cover damage resulting from all types of natural disaster, including floods.
At present, companies have different lists of risks covered by their 'all risk' policies. Some companies include floods or natural disasters in their standard all risk policies. Others offer extension risk coverage which can be included in a policy at the client's specific request.
According to DAI, however, the wording 'all risks' in an insurance policy is a technical term relating to a list of risks that are not covered in a policy.
An actual 'all risks' policy highlights risks that are not covered by the policy, Arizal explained.
"Insurance companies don't use the term correctly when selling their product to their consumers," he said, adding that AAUI would ask its 106 members to clarify the term.
Meanwhile, PT Asuransi Bintang has begun making downpayments to clients whose houses were inundated by the recent flooding.
"It is our commitment to make sure that our clients can get their rights," Ariyanti Suliyanto, the company's president director said.
As of Feb. 13, the company had received 122 flood-related claim notifications, covering 34 factories/businesses, 44 houses and 44 vehicles.
"In two days, we will have settled all 44 claims for houses with total downpayments of Rp 1 billion (about US$96,618)," Ariyanti added.
"The remaining payments will be calculated once we get the final settlement," she said.
Ariyanti added that the firm's reinsurance companies had provided funds to cover flood-related claims.
"We won't have any difficulties with our cash flows," she said.