RI included on list of regions labeled war risks

Fitri Wulandari, The Jakarta Post, Jakarta

Following the Bali bomb blast, an international insurance committee has included Indonesia in its list of war-risk zones, calling insurance and reinsurance firms to cancel or amend all contracts with vessels sailing to the country.

Should ship operators insist on entering Indonesian waters, they will be subject to additional premium.

Analysts warn the notice might discourage commercial vessels from traveling to Indonesia and as such could hamper the flow of goods into and out the country. This in turn could further hurt the country's fragile economy.

The London-based Joint Hull Committee issued the hull war risks cancellation notice Tuesday, only three days after the bomb blast that ripped through two night clubs in Bali and killed over 180 people.

It is effective Thursday and applies to all Indonesian ports, according to documents from the agency made available to The Jakarta Post on Wednesday.

The notice applies to insurance and reinsurance contracts for time covering war risks, the document said.

Indonesia is listed in the committee's "current exclusions" list along with other war torn countries such as Israel, Lebanon, Somalia, Congo and Sierra Leone.

"This coverage shall extend worldwide but in the event of a vessel or craft insured hereunder sailing for, deviating towards or being within the Territorial Waters of any of the Countries of places described in the Current Exclusions ... additional premium shall be paid at the discretion of insurers," the committee said in its notice.

The Joint Hull Committee consists of two prominent underwriters' associations: the Lloyd's Underwriters Association (LUA) and the International Underwriters Association of London (IUA).

IUA is the world's largest representative organization for international and wholesale insurance and reinsurance companies. Meanwhile, the LUA acts officially for marine underwriters at Lloyd's, the world's leading insurance market.

Hotbonar Sinaga, the chairman of the Indonesian Insurance Council (DAI) said the committee's notice might prompt ship owners and operators to think twice before accepting contracts to deliver goods in Indonesia.

"For those who have had contracts, they might go on with it. But those who want to have contracts or to renew contracts, they will think twice because they will have to pay higher premiums," Hotbonar told The Jakarta Post on Wednesday.

Hotbonar regretted the notice, saying it was exaggerated, despite the Bali incident. The situation in Indonesia was not that bad that the country could be categorized as a war zone.

"The cancellation is not a normal thing to do. They are just exaggerating. The bomb blast only happened in one area, not the whole of Indonesia. It is not a war zone," he stressed.

He predicted that the cancellation would not last for long. However, he admitted that it could disrupt the flow of goods to Indonesia.

Further, Hotbonar said that the DAI would file a request with the committee to have Indonesia excluded from the list.

Joint Hull Committee Current Exclusion Countries

1. Persian or Arabian Gulf and adjacent waters including the Gulf of Oman, 2. Angola (incl. Cabinda), 3. Israel, 4. Lebanon, 5. Libya (incl. Gulf of Sidre/Sirte), 6. Libya, 7. Eritrea, 8. Somalia, 9. Democratic Republic of Congo (formerly Zaire), 10. Liberia, 11. Sri Lanka, 12. Sierra Leone, 13. Gulf of Aqaba and the Red Sea, 14. Republic of Yemen, 15. Pakistan, 16. Oman, 17. Syria, 18. Algeria, 19. Egypt, 20. Indian Ports of 18 degree North, West of 73 degree East., 21. Indonesian Ports