Consumer protection groups criticize insurance firms over all risk policies
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.