Retailers seek insurance payments for riot damage

JAKARTA (JP): Members of the Indonesian Retail Merchants Association (Aprindo) whose premises were badly damaged during the recent social unrest are demanding insurance firms meet their claims for compensation.

"Without insurance compensation we cannot recover our losses and recreate jobs for over 14,000 employees," the association's executive director Kustarjono Prodjolalito told reporters yesterday.

Kustarjono said insurance firms must honor policies held by retailers which have provisions for damage incurred during riots.

He dismissed an earlier statement made by the Insurance Council of Indonesia that the unrest was political in its nature and therefore insurance firms were not obliged to pay out on claims for damage.

"We can ensure you that these acts were of a criminal nature, it was robbery," he said.

Most commercial property insurance policies in Indonesia include a clause covering riot, strike, and malicious damage (RSMD), but exclude damage resulting from politically motivated disturbances.

Separately, the Association of Indonesian Insurance Brokers called on insurance companies to pay damages to those who had an RSMD clause in their policies.

"The recent riots in several cities ... were clearly not political, but were a criminal act and reflected frustration at the effects of the monetary crisis," the association said in a statement yesterday.

It said that statements made by the defense ministry and the Armed Forces Commander Gen. Wiranto confirmed this, as did comments attributed to finance minister Bambang Subianto and the State Minister for Empowerment of State Enterprises Tanri Abeng.

Kustarjono said 90 percent of Aprindo's members were covered by insurance.

Jakarta was hit by four days of rioting, looting and arsons which began on May 13 and resulted in damage of Rp 2.5 trillion.

Aprindo announced yesterday that 33 of its members had lost a total Rp 661.52 billion in looted goods and broken equipment during the riots. This figure does not include losses from damaged and burned properties.

Kustarjono also said the figure did not include losses incurred by retailers who were not members of Aprindo, including those located in the Glodok commercial area in West Jakarta, the worst hit area.

Lost earnings through being unable to open in the immediate aftermath of the riots have not yet been taken into account.

The association said 125 stores and outlets belonging to its members had been burned and 119 robbed and damaged.

A total of 14,482 people are now without jobs because the shops where they worked have been destroyed.

Kustarjono said many retailers were unsure if they would continue with their business in the country.

"This is both a material and psychological blow to us. It is very traumatic," he said.

At least 10 Aprindo members plan to close their outlets and leave the country, he added.

Ethnic Chinese run much of the country's retail sector and are often targeted during times of economic hardship.

Ramayana Department Store suffered the worst losses last week. Twelve of its stores were burned and 14 looted, causing Rp 150 billion in damage. Four thousand of the companies employees are now out of a job.

Hero supermarket, the country's largest supermarket chain, suffered a loss of Rp 140 billion. Six of its six outlets were burned and 20 looted. Two thousand employees have lost their jobs.

Six Matahari Department stores were burned causing damage of Rp 80 billion. Sabar Subur department store lost Rp 12 billion when all four of its outlets were burned.

Kustarjono said the companies were continuing to pay their workers, but said he did not know how long this could continue without payments from insurance firms. (das)