Insurance firms urged to honor claims

JAKARTA (JP): The Ministry of Finance's director of insurance, Suyoto, has called on insurance companies to pay claims made by retailers whose properties were badly damaged during recent unrests.

"If the insurance policy covers damages incurred from riots, we are asking insurance firms to pay the claims of their clients," Suyoto said yesterday, the Neraca daily reported.

The business daily said Suyoto met with the Insurance Council of Indonesia (DAI) Wednesday afternoon to discuss solutions of disputes over compensation claims.

Retailers whose stores and outlets were looted and severely damaged during the four days of massive riots two weeks ago demanded local insurance firms meet their claims for compensation, which total at least Rp 661.52 billion (US$66.14 million).

DAI had earlier stated that the unrest was political in nature and, therefore, insurance firms were not obliged to pay out on claims for damage.

Most commercial property insurance policies include a clause covering riots, strikes and malicious damage but exclude damage resulting from politically motivated disturbances.

Suyoto admitted that different perceptions still prevailed over the nature of the riots.

"Whether the riots were political or not, we will return it to each of the policies," he told the daily.

He said some policies simply followed an official government statement to determine the nature of the riots.

"If the insurance policy states that the nature of the riots is determined by the government's official statement, there is no reason to differ in opinions," he said, adding that the companies should pay their clients' compensations immediately.

Through comments made by several officials, including the Ministry of Defense and the Armed Forces chief, Gen. Wiranto, the government has said that the riots were criminal acts.

Meanwhile, Neraca quoted its source as saying that, at the most, the insurance industry in the country only covered 10 percent of the compensation values.

"Most of the claims would be reinsured to international reinsurance firms," the source said.

Many Indonesian insurance firms were small, with assets totaling as little as Rp 3 billion. (das)