Insurance pool for tree crop and forestry risks

JAKARTA (JP): PT Aon Lippo Indonesia and 20 local insurance companies launched an insurance pool on Wednesday to underwrite forestry and tree crop risks.

Junaedy Ganie, the president of Aon Lippo, a subsidiary of the U.S-based insurance broker Aon Corporation, said the insurance pool offered a special package to protect forestry and plantation investors from losses due to catastrophe, such as fire, lightning, earthquake, flood and pests. It will also extend coverage to strikes, riots and civil commotion.

"This pioneer project will be a model for an insurance scheme involving key insurers, reinsurers, risk managers and national forestry and plantation customers under a partnership system," he said, adding the project was the first of its kind in the world.

He said that insurance coverage was limited only to forests, oil palm and rubber plantations, but in the future would include cocoa and guava plantations.

He said the pool was established in cooperation with London- based Agricultural Risk Management Ltd (ARM), which acted as a technical supporter in its operation, and also comprised five state-owned insurance brokers.

Members of the pool are Asuransi Central Asia, Asuransi Wahana Tata, Asuransi Sinarmas, Lippo General Insurance, Asuransi Bintang, Aspac General Insurance and Asuransi Jasa Indonesia.

Junaedy said the pool would also cooperate with European reinsurers, such as Wellington 2020 of Lloyds of London, London- based QBE and Zurich Re, ERC Francona in Munich, Partner Re in Switzerland and Chiyoda.

Junaedy explained that the pool could accept any qualifying risk up to Rp 80 billion (US$10.67 million) of which 15 percent would be retained by local insurers with the rest by overseas markets.

He added that the premium was based on value agreed within a particular scale with a base rate of 0.853 percent, and would impose a deductible of 20 hectares for forests and 5 hectares for tree crops.

"To avoid claims caused by arson, the risk surveys and assessments will be conducted by local loss adjusters approved by Lloyd's of London securities company," Junaedy added.

Junaedy said the pool is open to more local or joint venture insurers and insurance brokers in a bid to gradually reduce foreign participation. (01)