Indonesia's Disaster Risk Vulnerability: Insurance Protection Remains Inadequate

Jakarta — Indonesians live alongside significant natural disaster risks, including earthquakes and hydrological disasters resulting from climate change.

Nevertheless, public awareness of protecting property against natural disaster risks remains limited.

Budi Herawan, Chairman of the Indonesian General Insurance Association (AAUI), stated that in Indonesia, natural disaster insurance remains constrained by a substantial protection gap, as not all buildings and properties have insurance coverage.

The AAUI is currently working to reduce this protection gap. “Claims covered by insurance that we receive at the AAUI amount to approximately 1 trillion rupiah from motor vehicles and property,” he said during a general insurance update press conference for the fourth quarter of 2025 held on Friday, 20 February 2026.

Meanwhile, the economic losses from ecological disasters are estimated to reach 60 trillion rupiah.

Recovery from the disaster that occurred in Sumatra last year remains incomplete, with vital infrastructure such as bridges and public housing still under reconstruction.

Several options have emerged to address such events, including the establishment of a pooled insurance fund and the potential mandatory requirement for natural disaster insurance.

For its part, Budi noted that the government, specifically the Ministry of Finance, would also face difficulties if required to bear the entire cost of disaster impacts.

“The Ministry of Finance would certainly struggle if burdened with quite substantial budget allocations, given our current economic conditions,” he said.