Insurance companies await huge claims
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)