Insurance firms told to honor contracts with riot victims

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)