Massive insurance claims expected in aftermath of Jakarta floods
As the floodwater began to recede in some parts of Jakarta yesterday, insurance companies and retail shops started to calculate claims and losses resulting from massive flooding in the past few days.
The Association of General Insurance Companies (AAUI) estimated its members would have to pay claims higher than those paid in 2007 and 2002, the years when major floods also hit Jakarta.
“The flood [in the past few days] has affected wider areas in Jakarta. So we are preparing for higher claim amounts for both properties and vehicles. We cannot specifically mention the figures right now as we are still assessing all reports,” AAUI executive director Julian Noor said yesterday.
Meanwhile, the Indonesian Retailers Association (Aprindo) reported that the floods had decreased stocks by an average of 10-15 per cent for players in the retail industry and had caused billions in losses for retailers whose outlets became submerged in floodwater.
The floods have not only submerged residential areas, but have also covered toll roads leading to ports, including the toll road to Tanjung Priok Port and the toll road to Merak Port.
Aprindo deputy secretary-general Satria Hamid said the movement of stocks from suppliers had yet to return to its maximum level. “We estimate that the supply of stocks will return to normal within four days,” he said.
Based on AAUI data, insurance companies paid a total of 2.01 trillion rupiah (US$207.64 million) in flood-related claims in 2007. The figure comprised 2 trillion rupiah in property claims and 15 billion rupiah in vehicle claims.
In 2002, the amount stood at 1.51 trillion rupiah, comprising property claims of 1.5 trillion rupiah and vehicle claims of 14 billion rupiah.
According to Julian, the majority of private car and house owners in Indonesia possess basic insurance products that protect cars from accident and theft as well as houses from fire.
To receive protection from flood damage, they have to purchase additional insurance coverage. However, in the business or commercial sector, most properties must buy all-risk insurance — floods included — as required by banks, Julian added.
Similar to AAUI, state-owned insurance firm PT Jasindo also estimates that claim amounts will exceed those of 2007 and 2002.
Jasindo automotive division head Sahata Lumbantobing said that in 2007, the claims it received mostly came from North Jakarta, such as Kelapa Gading and Pantai Indah Kapuk, considered to be flood-prone areas.
“Now we’ve also received claim reports from the Thamrin area,” he said. As of Monday, Jasindo had received nine car claims, four for cars parked in the flooded UOB Plaza.
PT Zurich Insurance Indonesia president director Sancoyo Setiabudi said the company had deployed several tow trucks for its customers.
“We haven’t been able to estimate the flood damage we must cover as the claim figures keep changing. Last week we received dozens of reports. This week we will probably receive more,” he said.
The Meteorology, Climatology and Geophysics Agency (BMKG) had previously predicted that heavy rainfall in Jakarta would peak on January 27.