Indonesia's Insurance Sector Prepares for Disaster-Related Claims Surge

Assessing Damage and Insurance Coverage

The Indonesian General Insurance Association (AAUI) has announced that its member companies are currently in the early assessment stage to determine the extent of damage and insurance coverage in Sumatra regions affected by recent natural disasters. The assessment covers areas impacted by severe flooding in Aceh, North Sumatra, and West Sumatra provinces.

Potential Insurance Claims

AAUI Chairman Budi Herawan stated that potential insurance claims are expected primarily from the property insurance sector, including residential homes and business premises, as well as motor vehicle insurance. Herawan emphasized that insurance companies are working to process claims quickly, transparently, and fairly according to policy provisions to provide immediate relief to disaster victims.

Industry Preparedness and Financial Stability

The insurance industry has been preparing for potential claims by maintaining robust financial buffers. Herawan highlighted that Indonesian insurance companies have multi-layered mechanisms to ensure their ability to pay claims, including adequate equity, risk accumulation management, and strong reinsurance support. For large-scale disasters, both domestic and international reinsurance protection plays a crucial role in ensuring liquidity and timely fulfillment of obligations to policyholders.

Regulatory and Industry Response

The AAUI is coordinating closely with insurance and reinsurance companies to monitor the situation and ensure a coordinated response. Herawan noted that while the industry is prepared to handle the anticipated claims, major disaster events serve as important lessons to strengthen risk-based underwriting practices. Future adjustments are likely to be made in risk assessment, catastrophe modeling, and risk accumulation management, particularly in disaster-prone areas.

Disaster Impact Statistics

According to the National Disaster Management Agency (BNPB), the recent floods have resulted in significant human casualties. The reported figures include 174 fatalities, 79 missing persons, and 12 injured across the affected provinces. North Sumatra recorded the highest number of fatalities at 116, followed by Aceh with 35, and West Sumatra with 23. The BNPB continues to update these figures as assessments in affected areas progress.