Indonesia's insurers review policy on natural disasters

JAKARTA (JP): Indonesia's insurance industry is reviewing its policy with regard to natural disasters, including the level of premium, after Singapore's reinsurance companies refused to accept insurance against damages caused by such calamities.

The Indonesian Insurance Council (DAI) said on Tuesday that it had set up a joint task force on Nov. 30 with the Directorate of Insurance at the Ministry of Finance to look into the matter.

The Singapore Reinsurance Association had demanded the Indonesian insurance industry resolve the problem and set a more appropriate level of premium for insurance against natural disasters, Frans Y. Sahusilawane, chairman of the task force from the council, told reporters.

The matter would be discussed by experts at a seminar entitled Are Indonesian people and Indonesian insurance companies ready to face impacts of earthquake and other natural catastrophes? on Friday at Borobudur International Hotel.

The seminar is intended to socialize the risks of natural catastrophes to insurance firms and their clients, Frans said.

The premium for insurance against natural disasters is considered too low, Sri Hadiah Watie, head of the task force's underwriting committee, said.

Most of insurance companies include risks of natural disasters into a single package with insurance against fire in order to keep premiums competitively low, she said. This went against a 1996 DAI proposal that insurance companies offer insurance against natural disasters in a separate package, she added.

It is not immediately clear how the insurance companies have been affected by the spate of natural disasters, particularly floods and landslides which have hit the northern half of Sumatra and north Sulawesi in the last two weeks.

An insurance executive said the impact would be most devastating to the industry if Jakarta was struck by a powerful earthquake or other forms of natural disasters.

Currently, some Rp 76 trillion ($8 billion) worth of property in Jakarta are insured against natural disasters, Frans said.

One company, PT Asuransi QBE Pool Indonesia, said it had paid out four claims, ranging between US$50,000 and $300,000, for structural damages caused by tremors to office buildings in Jakarta in the last 12 months.

According to the insurance council, Indonesia each year records an average of 700 earthquakes; 40 of these are felt in populated areas. (03)