Insurance companies await huge claims
JAKARTA (JP): Insurance companies are nervously waiting for claims from owners of cars and properties damaged during three days of riots and arson in Jakarta and nearby towns last week to start pouring in.
G. Sulistiyanto, managing director of LG Simas Insurance, a company which provides riot-risk coverage, said his company was still waiting for claims from clients affected by the arson and looting.
He said all claims would be honored if the insurance policies contained cover against RMDS, which stands for riots, malice, damages and strikes-risk facilities.
"RMDS is an additional clause which can be added to insurance policies," he told The Jakarta Post.
But he said his company might stop offering high-risk coverage given the escalating political tension in the country.
"If we do continue to offer the policy we will be very selective," Sulistiyanto said.
He said that the clause would have to be ended if LG Simas's reinsurance partners considered the situation in Indonesia to be too unstable.
Sulistiyanto said that his company started to limit the issue of riot-risk policies in early January because of the worsening political situation in Indonesia.
"In fact we added several requirements to the criteria for issuing an RMDS clause in January so that we could be more selective in choosing who took out the policies," he added.
He said most of the country's loss insurance companies had stopped offering riot-risk coverage after July 27, 1996, when supporters of the government-backed Indonesian Democratic Party (PDI) led by Soerjadi forcibly took control of the party's Jakarta headquarters which were in the hands of supporters of ousted leader Megawati Soekarnoputri. Many people were killed in the ensuing violence.
Irawati, a claims manager at Astra Buana Insurance, said that although her company offered riot-risk coverage, its customers still preferred not to add RMDS to policies which they purchased.
"Most do not seem willing to spend the extra money required to add an RMDS clause to their policy," she told the Post.
Jakarta was paralyzed last week as thousands of people looted shops and damaged and burned hundreds of buildings and vehicles.
Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said on Monday that losses in the city were estimated to be in the region of Rp 2.5 trillion (US$250 million).
Jakarta Governor Sutiyoso said approximately 4,940 buildings in the city had been damaged, burned or looted, including 4,204 shops, shopping malls, restaurants, automobile workshops and more than 500 bank offices.
In addition, he said, 1,026 houses were either looted or damaged, two churches were burned down, 1,120 cars and 821 motorbikes were set ablaze, and almost 520 street lights and traffic lights were damaged.
The Indonesian Retail Merchants Association said that retail stores might have lost up to Rp 600 billion from the three days of mayhem.
The Indonesian Insurance Council (DAI) was quoted by Antara news agency as saying that most insurance companies did not cover losses inflicted during riots.
DAI Secretary General Andrian J.K. said that most of the country's insurance companies had stopped offering such cover last August, when political tensions began to rise. (gis)