Riot victims set ultimatum for insurance firms

JAKARTA (JP): The Indonesian Retail Merchants Association (Aprindo) demanded yesterday that insurance companies immediately pay compensation for their damaged retail outlets or be prepared to suffer a tarnishing of their image.

The chairman of the association's supervisory council, Steve Sondakh, said the insurance companies should compensate within "a certain time", or their names and the amount of the claims they owed would be made public.

"I'm sure this will be a disgrace for them, as insurance is a trust-based business, if we publish their names. There would be no more trust in the insurance companies in Indonesia," he said.

Steve added that the ultimatum would be brought to the attention of Minister of Finance Bambang Subianto and President B.J. Habibie

A deadline for payments has not been determined, but it would be soon, he said.

Steve said more than 90 percent of Aprindo members' insurance policies include the riots, strike and malicious damage (RSMD) clause and they were entitled to compensation.

"It is almost four months since the riots, and the insurance companies are still being evasive about the payment disbursement," said Steve, also a director of the Hero Supermarket chain which suffered Rp 140 billion (US$10.77 million) in losses during the May riots.

More than 1,000 people were killed and thousands of retail outlets were burned or looted during riots which hit Greater Jakarta between May 13 and May 15.

The association's members, now in dire need of funds to repair their outlets, had received less than 10 percent of the total claims, he said.

Some insurance companies only paid part of the amount claimed, while others compensated under certain conditions, he added.

For example, he said one retail chain which suffered losses reaching almost Rp 100 billion only received Rp 700 million, less than 1 percent of the damage suffered.

Other insurance firms disbursed their payments pending on the progress of the building renovation, he said.

A total of 33 members of Aprindo suffered losses amounting to Rp 662.52 billion during the riots, which contributed to president Soeharto's resignation. Losses occurred in 125 burned outlets and 119 looted and severely vandalized stores.

Steve said the retailers would not be able to restore their businesses without the insurance payment because they could no longer afford to obtain bank loans at current high interest rates.

On Tuesday, the chairman of the Indonesian Insurance Council (DAI), Munir Sjamsoeddin, said some foreign reinsurers were still reluctant to honor their contracts with the local insurance firms as they categorized the riots as political.

DAI announced in June that the riots were criminal acts and that policy holders with the RSMD clause were entitled to payments.

Most local insurance firms, many of which have very small capital, retain only 10 percent of the risks claims and reinsure the remaining 90 percent to foreign firms.

But Steve said policy holders should get their money despite reinsurers' unwillingness to honor the contracts.

"Whatever the excuses, we don't want to know (because) as long as we pay the policy, we should get the money. It is their business with the reinsurers," he said.

An international reinsurance association has decided that the majority of losses incurred in riots in Indonesia in May were not covered by existing insurance contracts.

In a letter to the DAI, the Singapore Reinsurers Association said the magnitude and scale of the events in May resembled more a "civil commotion" or "popular uprising" rather than riots and thus were not covered by insurance policies.

The association stressed it had not taken a definitive view on the situation but "with each passing day, new evidence has been uncovered which tends to point out that the riots were organized.

"This would further strengthen our view that most of the losses are excluded," it said. (das)