RI to introduce earthquake insurance policy
RI to introduce earthquake insurance policy
JAKARTA (JP): The Indonesian Insurance Council is planning to
introduce a standard earthquake policy to attract more customers.
The council's chairman, B. Munir Samsoedin, told journalists
here that the earthquake policy, offered as a separate package,
is the latest addition to the world's insurance industry.
"Although our insurance industry is not well developed yet, we
are pioneering a new service with this earthquake policy," Munir
said on Monday at the announcement of this new standard policy.
Sri Hadiah Watie, chairperson of the council's ad-hoc
committee on earthquake and volcanic eruptions policies, said her
team had discussed the draft of the policy with experts at the
Risk Management Solution Center in California, the United States,
Stanford University in California and Nanyang University in
Singapore.
She added that to develop the Indonesian earthquake policy,
her team had also sought input from the Meteorology and
Geophysics Agency at the Ministry of Transportation, the
volcanology directorate at the Ministry of Mines and Energy, and
a number of Indonesian experts on construction.
"All parties we consulted have supported our efforts to start
up an Indonesian earthquake policy," Sri said.
Currently, earthquake risks are covered in the fire risk
insurance policy, together with volcanic eruptions and tsunamis
(freak tidal waves of colossal size).
"We in the council agreed that earthquakes, eruptions and
tsunamis ought to be treated separately," Sri said.
She argued that a house on a hillside far from the sea is fied
against tsunamis but may be exposed to either volcanic eruptions
or earthquakes, depending on the location.
"The owner of this house won't need to buy a tsunami policy,"
Sri pointed out.
More choices
"With this new standard policy, customers will have more
choices. They can buy a fire policy with an earthquake policy
only or a fire and tsunami policy only or a fire and volcanic
eruption policy," Sri enthused.
The earthquake policy covers losses or damages to the insured
property caused only by an earthquake, which for the purpose of
the new policy is defined as a shaking or trembling of the earth
due to geological phenomena such as tectonic movement and
volcanic eruptions.
The volcanic eruption policy covers loses or damages from a
volcanic eruption, which is defined as the issuance of molten or
hot rock or steam, gas or liquid from vents in the earth's crust.
The tsunami policy covers losses or damages caused by a
tsunami, which is defined as a great sea wave produced by
submarine earth movements or submarine volcanic eruptions.
The premium rates for earthquake policies range from 0.005
percent to 2.09 percent per annum, depending on the quality of
the building and the earthquake-zoning.
The new tariff structure was calculated on the basis of a
deductible of 2.5 percent of the total sum insured and a
coinsurance percentage of 10 percent, which is borne by the party
seeking insurance.
An additional rate will be applied to the sum insured to
include the risk of fire and explosions following earthquakes.
Indonesia is divided into six different areas, from the area
bearing the highest earthquake risk, zone one, to that bearing
the lowest earthquake risk, zone six.
Jakarta, for instance, is in zone four, which also includes
Bekasi, Bogor and Tangerang, all in West Java, Semarang in
Central Java and Surabaya in East Java. Bandung in West Java and
Yogyakarta in Central Java both fall into zone three.
An insured residential house in Jakarta, for instance, will
have an annual rate of 0.008 percent for fire risks and 0.042
percent for earthquake shock risks.
An additional rate will be applied to the total sum insured to
include the risk of volcanic eruptions or tsunamis. (rid)