Only Rp 5b of riot victims' insurance claims so far

JAKARTA (JP): The Indonesian Retail Merchants Association (Aprindo) said on Wednesday that only Rp 5 billion (US$462,962) of claims worth Rp 661.5 billion submitted by its members in the aftermath of the May riots has been paid out by insurance companies.

The association's executive director, Kustarjono Prodjolalito, said on Wednesday that insurance firms had only honored claims for damage worth less than Rp 1 billion.

"They have also paid out very insignificant fractions of the claims submitted by policy holders," he said, citing the case of a store which suffered Rp 20 billion in damage but was only awarded Rp 50 million by its insurance company.

Claims submitted in the aftermath of the May riots, which led to the downfall of then president Soeharto, range from the Rp 240 million claimed by Keris Gallery to Rp 150 billion claimed by Ramayana Department Store, the worst hit retail chain in the trouble.

The time which it is taking to process has prevented restoration work from beginning on the 125 stores set on fire during the rampage, Kustarjono said.

He added that 60 percent of the 119 outlets vandalized and looted in the riots, which claimed over 1,000 lives, were also still in a state of disrepair.

Five thousand workers have lost their jobs as a result of the destruction wrecked upon shops in the mayhem, he said.

Kustarjono said big chains whose stores were badly damaged, such as Hero Supermarket, Ramayana and Yogya Department stores, were unlikely to have received their claims in full.

But he said the association would publish the names of insurance companies that were refusing to honor claims if they did not change their stance by Sept. 15.

The association has also sent a letter to the finance ministry requesting a meeting with officials and members of the Indonesian Insurance Council (DAI) and has approached the government for assistance to help its members begin to rebuild their businesses without having to wait for insurance claims to be settled.

"Without the money retailers cannot restart business because interest rates are too high for them to take out new loans," he said.

Separately, the Singapore Reinsurers' Association (SRA) said it has advised its members to settle claims submitted by Indonesia's riot victims on a "without prejudice basis, and without precedent to future liability."

The association said this would speed up settlement of the claims.

But the reinsurer's association did not rule out the possibility that settlements would vary on a claim to claim basis, according to the terms of the individual policies.

Members are free to follow its recommendation or to take their own line on the matter.

"Given the different circumstances of each claim and insurance policy, liability or otherwise can only be finally determined in a court of law," the association said in a statement.

"However, this would result in long delays and high expense which would put both insurance companies and claimants under severe financial strain."

SRA initially advised its members not to pay out on reinsurance claims submitted by Indonesian insurance firms, arguing that the May unrest was a civil commotion, its term for a politically motivated outbreak of violence of greater severity than a riot.

However, the Indonesian Insurance Council announced in June that the riots were not political in nature, paving the way for policy holders with riot damage cover to receive compensation.

The reinsurer's association also said that it and the council were working together to redefine the terms and conditions of policies sold in Indonesia to avoid future ambiguity in policy coverage. (das)