Indonesia Moves Towards Mandatory Disaster Insurance

Regulatory Push for Comprehensive Coverage

Indonesia's Financial Services Authority (OJK) is actively promoting the implementation of mandatory disaster insurance, recognizing the country's high exposure to natural disasters ²

. This initiative has garnered support from major players in the insurance industry, including state-owned insurer PT Asuransi Jasa Indonesia (Jasindo) and private insurer PT Great Eastern General Insurance Indonesia (GEGI).

Current Insurance Penetration Challenges

Despite the growing need for disaster insurance, penetration remains alarmingly low. Brellian Gema Widayana, Secretary of Jasindo, highlighted that many residential properties, small businesses, and productive assets remain uninsured against natural disasters ³

. This leaves owners fully exposed to financial losses in the event of catastrophes.

Industry Response and Product Offerings

The insurance industry is responding with comprehensive product offerings. Jasindo has introduced flood insurance extensions on their general insurance products, providing additional protection beyond standard coverage against fire, lightning, and explosions ³

. GEGI also supports the mandatory insurance program, emphasizing that while products exist, government backing is crucial for broader implementation ¹

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https://keuangan.kontan.co.id/news/great-eastern-general-insurance-menilai-ada-potensi-besar-asuransi-wajib-bencana

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Economic Rationale and Government Benefits

The proposed mandatory disaster insurance aims to achieve two key objectives: reducing the fiscal burden on the government following disasters and accelerating economic recovery. Linggawati Tok, Marketing Director of GEGI, noted that without mandatory coverage, the financial strain on both government resources and individual households can be overwhelming ¹

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Regulatory and Industry Collaboration

Chairman of OJK's Board of Commissioners, Mahendra Siregar, emphasized the need for insurers and reinsurers to develop appropriate products that meet the needs of various stakeholders, including government entities and the general public ³

. This collaborative approach between regulators and the insurance industry is seen as crucial for the successful implementation of the mandatory insurance program.