Public awareness of natural disaster insurance has improved but the increase in penetration was marginal only over the past year, according to the chairman of the Indonesian General Insurance Association (AAUI), Mr Hastanto SM Widodo.
He told the local media, “The level of consumption is currently low. The penetration increase is 0.5%.”
Separately, Mr Heddy Agus Pritasa, Director of Reasuransi Maipark Indonesia, assesses that the capacity of reinsurance and general insurance companies in providing natural disaster protection is quite adequate.
“In general, we feel that the solvency is sufficient; it is sufficient to cover disaster insurance. We also implement good risk management, with the support of domestic and foreign reinsurers related to this,” he added.
Based on Maipark’s brief study regarding risk exposure to earthquakes, the potential for natural disaster insurance is huge. Mr Heddy said, “For example, from our data from the recent earthquake in Majene and Mamuju, there are around IDR825bn ($59m) in the potential risk of being affected, with a potential loss of nearly IDR90bn.” The example he cited was the magnitude-6.2 earthquake that took place last month.
The risk potential is expected to increase as more data become available.
Mr Heddy said that interest in disaster insurance had intensified since the West Sumatra earthquake in the third quarter of 2018. In fact, the government has also begun to insure state-owned assets.