Insurance firms told to honor contracts with riot victims

JAKARTA (JP): President B.J. Habibie told senior Indonesian insurance executives yesterday to honor their contracts with victims of last May's riots and to pay the claims soon so their clients could restart their businesses.

Chairman of the Association of Indonesian Brokers (ABAI) Rubiyanto said the insurance executives, however, told Habibie it would be very unlikely that they would meet the claims in a short time due to the complexity of the problems, including cash flow difficulties.

Rubiyanto indicated insurance companies needed at least a year to process thousands of claims involving huge amount of money.

"The president took note of our report and underlined the need for us to pay the claims as ruled in the contract. He called on insurance companies to give the victims of the riots an opportunity (to restart their businesses)," Rubiyanto said after meeting with Habibie at the Bina Graha presidential office.

The meeting was attended by the executives of ABAI, the Indonesian Insurance Council (DAI) and the Association of Indonesian Insurance Adjuster Association (AAAI).

Habibie was accompanied by Secretary of Development Operations Lt. Gen. (ret) Sintong Pandjaitan.

Rubiyanto said one of the most complicated problems was a different interpretation on the nature of the riots with Singapore-based reinsurance companies.

The government declared the riots nonpolitical in nature.

"Just like the opinion of (blind people) who hold the leg of an elephant," Frans Sahusilawane, an insurance executive, said about the difficulty of the problems.

DAI decided last month that owners of shopping centers, shophouses and shops damaged during the riots could submit claims to insurance companies if their policies included coverage for riots, strikes and malicious damage.

The council, however, warned that a banking clause in some policies may prevent the claimants from receiving their money.

"This is a gray case," Frans remarked.

According to the government's official estimate, the three days of rioting that began on May 13 caused at least Rp 2.5 trillion (US$227.27 billion) in damage in Jakarta alone.

"The insurance industry has never faced such big claims before," Rubiyanto said.

The Chairman of Indonesian Retail Merchants Association Steve Sondakh told Habibie earlier this month his members suffered losses worth Rp 661.52 billion w(US$47.5 million) when their outlets were looted. Building damages were excluded from the estimation.

Both Rubiyanto and DAI's Munir Syamsudin said they did not know the precise number of claimants or the total amount of their claims.

"There are thousands of claims, if you ask us how many or how much, we don't know," they said.

When pressed further by journalists, Rubiyanto said there were at least 10,000 claims after the riot.

Rubiyanto acknowledged that many insurance companies were facing cash-flow problems but insisted that was not the main problem delaying the payments. (prb)