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The Indonesian Sharia Insurance Association will launch a
joint product to cover the risks arising from natural disasters, an
industry leader says.
Association chairman Muhaimin Iqbal said Tuesday in Jakarta that the
new product, to be called Disaster Cash Plan, would provide the best
protection against damage caused by natural disasters as it would allow
policyholders to receive cash payments soon after filing their claims
without having to wait for the insurer to appraise their losses.
"We have completed the policy design, and are now working on the
pricing scheme," he said.
He said that the product, which would be marketed jointly by a number
of insurance companies, would provide policyholders with hassle-free
claim procedures.
Premiums would be determined flexibly based on the policyholder's needs
and the risk level of the area in which he lived. "Policyholders who
live in high-risk areas will obviously have to pay higher premiums than
those living in lower-risk areas."
"We are going to offer this new concept to all insurance companies,
both conventional and sharia, as we realize that this business is too
large to be covered by one company as it will involve natural disasters
that give rise to huge losses," said Iqbal, who is also president
director of general insurance firm PT Asuransi Bintang Tbk.
"This collaboration will allow the companies to spread the risks," he
explained.
Iqbal said that the new product would be able to secure a market
despite the low rate of insurance penetration in Indonesia.
Indonesia's general insurance penetration level only amounted to 0.65
percent of GDP last year, far lower than China's 4 percent and Europe's
11 percent.
After the devastating floods that hit Jakarta in February, insurance
companies paid out claims amounting to some Rp 4 billion, covering
almost half of the total losses of Rp 8.6 billion estimated by the
National Development Agency.
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