Consumer protection groups criticize insurance firms over all risk policies

Fitri Wulandari, The Jakarta Post, Jakarta

Consumer protection watchdogs demanded insurance companies to provide consumers with detailed explanations about their products, particularly the "all risk" policies to avoid misinterpretation.

The Indonesian Consumer Protection (YLKI) and the Indonesian Insurance Consumer Protection (YLKAI) said that many consumers had complained that their "all risk" clause did not cover floods.

"The term 'all risk' needs to be clarified whether it covers natural disaster claims or not," Daryatmo, a legal consultant at YLKI, told The Jakarta Post on Monday.

Mira Amalia Malik, chairwoman of YLKAI, was of the same opinion saying that a policy document normally stipulated the list of risks to be covered.

"Insurance companies must give detailed explanations about their products," she said.

Both said that the misinterpretation of the term "all risk" amongst the public is a growing concern. Particularly, in regard to natural disaster-related risks.

In the aftermath of the recent floods, many insurance policy holders were disappointed after learning that their "all risk" insurance did not cover floods.

A man, who refused to be indentified, recently told The Post that he had filed a claim with an insurance firm for his car, which was submerged for three days during the flooding. However, the company rejected the claim, saying it was not insured for flooding despite the "all risk" clause.

"The company has never explained that the 'all risk' clause does not cover the flood. This is against business ethics. They seek to profit from people's ignorance," the man said.

Daryatmo said that many special risk policies, in addition to standard policies, had created a loophole for insurance companies to avoid their obligation to pay up on claims.

"Many exception clauses lead to misinterpretation. Insurance companies can avoid their obligation behind such clause," he said.

An open-ended clause often leads to different interpretations between consumers and their insurance companies, he said.

"Each will interpret it according to their interest," Daryatmo said.

For cases like this, it is better to let the court interpret the clause, he added.

Some companies said that their "all risk" policy does cover floods. These include Garda Oto, PT Asuransi Bintang and PT Asuransi Allianz Utama Indonesia.

However, others said that floods were not included in their standard "all risk" policy but they offered it as an extension risk coverage. For instance, PT Jasindo and PT Asuransi Central Asia.

They claimed extension risk coverage for floods had never interested consumers until the recent flood.

Claims manager at Asuransi Central Asia, Yuyun, said that the extension coverage for flood risk required an additional 0.5 percent fee to the insurance premium.

Daryatmo also suggested that the government should intervene to set a standard for insurance contracts.

Meanwhile, Mira said insurance policy documents should be produced in line with the 1999 Consumer Protection Law.

For example, she said, like a contract document, insurance policies should be written in Indonesian and printed in large fonts.

"If you look at insurance policy documents, many of them are printed in small fonts and in English. Consequently, consumers tend not to read them thoroughly," Mira said.

Mira said that her institution was currently conducting research on "all risk" policies.