High Disaster Risk: Home and Vehicle Insurance Remains Rarely Owned

Indonesia is recognised as one of the countries with a high level of natural disaster risk. Indonesia’s geographical position in the Pacific Ring of Fire zone means that various types of disasters, ranging from earthquakes and floods to landslides, have the potential to occur across multiple regions.

This situation causes significant economic losses, particularly to the physical assets of the population, such as residential houses and motor vehicles.

Industry data demonstrates that protection for housing assets against disaster risks remains extremely limited.

Ruben Damanik, Strategic Planning & Risk Management Group Head at PT Reasuransi MAIPARK Indonesia, noted that the number of homes with disaster insurance protection remains very small compared to the total number of homes in Indonesia.

He stated that fewer than 0.1 per cent of residential homes in Indonesia have disaster insurance protection. Out of approximately 64 million homes in Indonesia, only around 36,000 homes are insured against disaster risk.

This low level of protection creates a large gap between the economic value of losses caused by disasters and the value of losses covered by insurance.

According to Ruben, this situation does not only occur in property damage but also affects the economic recovery of communities following disasters.

For example, the economic loss from the 2004 Aceh earthquake and tsunami reached approximately Rp41.4 trillion, whilst the value of insured losses was only around Rp650 billion.

A similar phenomenon has also been observed in various disasters that have occurred in recent years.

When the 2022 Cianjur earthquake caused hundreds of thousands of homes to be damaged, only a small portion of homes had insurance protection.

Natural disasters occurring in various regions in recent years have demonstrated that resulting losses can reach hundreds of billions to trillions of rupiah.