Firms urged to honor riot victims' claims

Firms urged to honor riot victims' claims

JAKARTA (JP): The Insurance Council of Indonesia (DAI) urged
its members yesterday to honor claims raised by owners of
shopping centers, shop/houses and shops affected by riots last
month.

Council chairman Munir Sjamsoeddin told reporters that
retailers whose premises and shops were burned or looted during
the unrest could claim damages if their policies included
insurance for riots, strikes and malicious damages (RMDS).

"Fire insurance policies without the RMDS clause would not be
eligible for compensation claims." But Munir said the council
could not force insurance firms to pay the claims.

"Companies have different opinions on the nature of the riots.
We have no way to force them (to pay)," he said, adding that a
government statement was only one of several factors used by
insurance firms to determine the nature of an incident.

DAI had earlier stated that the unrest was political in
nature, but several government officials have said that the riots
were merely acts of crime.

Fire insurance policies, even with the RMDS clause, exclude
damages resulting from politically motivated disturbances.

Munir said the council was now in the process of gathering
information to determine the value of the claims raised by policy
holders.

"Adjusting the damage value is not easy. From past experience,
it could take between one and 12 months, depending on the
complexity of the cases."

He said the claimants must produce sufficient documents needed
to prove the value of their damaged properties.

For example, owners of burned stores could show their store
stock cards as evidence of the store's value.

Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita estimated earlier that the property losses
incurred during the outbreak totaled Rp 2.5 trillion (US$250
million).

The Indonesian Retail Merchants Association said last month
its 33 members that had stores and outlets looted or burned
during the massive riots reported at least Rp 661.52 billion in
damages, excluding losses from damaged and burned property.

The association said 90 percent of its members, which include
the country's major retail chains of Hero supermarkets and
Ramayana department stores, were covered by insurance.

But he said most of the small shop/houses destroyed during the
massive riots which started May 13 did not have RMDS as part of
their insurance policies.

Munir dismissed the question whether the huge damage claims
would lead to the fall of the country's insurance sector, which
is weak in capital.

"Insurance firms which have good risk management will not go
bankrupt," he said.

Reports indicate that many insurance companies have capital as
low as Rp 3 billion and only retain 10 percent of the
compensation values at the most.

About 80 percent of their underwriting values are reinsured
through foreign insurance companies due to their weak financial
capacity.

Whether or not the riot victims could receive their
compensation, it would rest on the decision of foreign insurers,
he said.

The director of insurance in the finance ministry, Suyoto,
said yesterday there were about 106 insurance companies with loss
policies in the country. (das)