Insurance Council to set up arbitration institution

JAKARTA (JP): The Indonesian Insurance Council plans to establish a pre-arbitration institution later this year to help solve claims rows between insurance firms and their customers.

Syamsul Bahri Harahap, an executive of the council's legal department, said yesterday that the country's expanding local insurance industry would probably open up more possibilities for claims disputes between insurers and their customers.

He explained such disputes will potentially emerge when insurers and customers differ in interpreting their agreements, or when insurers fail to meet all the claims put forward by their customers.

"Such disputes have helped dent the image of our insurance industry," Syamsul said, acknowledging the country's insurance industry is still building up its image.

He promised that the planned pre-arbitration institution will give services to all parties seeking insurance justice. He also guaranteed its independence.

He said his department has so far given legal opinions to those involved in disputes over fire and marine cargo insurance claims.

Since 1994, the council's legal department has received over 100 disputed claims, 40 percent of which have been processed and been given a legal opinion.

"However, our legal opinions are not binding on both parties. If they are not satisfied with our advisory services, they can go to BANI," Syamsul said, referring to the Indonesian National Arbitration Agency affiliated to the Indonesian Chamber of Commerce and Industry.

In addition to BANI, Indonesia also has the Alternative Dispute Resolution Center, established by a number of noted local business people in January. The center offers services to settle civil disputes between or among companies.

Asrul Togo, another executive at the legal department, noted that going to BANI often takes time, energy and of course money. Therefore, the council's pre-arbitration institution is expected to expedite the arbitration processes.

He added that the decisions to be taken by a panel of judges at the pre-arbitration agency will be binding.

"Therefore, before we start trial sessions, we will require both parties (insurers and customers) to sign a declaration letter saying that they will abide by the panel's decisions," Togo said when announcing the convening of an insurance seminar, to be held in Surabaya, East Java, on May 29.

The seminar, which will feature a number of local fire and marine cargo insurance practitioners, will focus on insurance claims. (rid)