Earthquake insurance- 4-drr


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The Final Concept for 5th Asean Ministery Conference on Disaster Risk Reduction
For Side Event #13 | 22-25 Oktober 2012 | Jogja Expo Center Yogyakarta

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Earthquake insurance- 4-drr

  1. 1. SOEsatyobudikurniawan Palupi Listiyani
  3. 3. 1 ABSTRACTDisaster is not inevitable events by anyone, it can affect anyone,anything and anywhere. Although basically a disaster itself hasspecific symptoms that can detected by humans, it is notuncommon disasters can occur spontaneously.The disaster itself is defined as an event or series of events thatthreaten and disrupt the lives and livelihoods caused by bothnatural factors or non-natural factors and human factors thatlead to the emergence of human casualties, environmentaldamage, loss of property and psychological impact, oneexample as earthquakes.
  4. 4. The paradigm shift that considers earthquakes, volcaniceruptions, floods and soil erosion is a natural phenomenon ina future filled with uncertainty.Losses would be very likely to occur if not done since thedisaster risk reduction at this time, in recent years manystakeholders have developed several mitigation programs inboth structural and non-structural various sectors, especiallyinfrastructure. Although people are increasingly sensitive to seismic hazardrealize that earthquakes will not cause death, but thevulnerability of structures that cause damage and casualties.Implementation of the field is still a question mark.
  5. 5. One of the risk transfer (derivatives) in making disaster riskmanagement is insurance. Earthquake insurance productapplications has increased significantly in Jogjakarta, with only1.5‰ of the premium total annual value of the building, customerswill get the full protection if we insure the building had beencompletely destroyed by the earthquake that occurred.Originally expected earthquake insurance organization toencourage the implementation of Earthquake Resistant BuildingsREGULATIONS In accordance RSNI 03-1726-2010 based MAPIndonesia Earthquake 2010. Initial research will examine how theapplication of the requirements The set tends to favor businessinterests Insurance even cause a reduction in the level ofcommunity awareness and may lead to moral hazard.
  7. 7. Indonesia known as disaster-prone region it is situated at theconfluence of three major plates of the earth, the Pacific, Eurasian,and Australian-Indian Ocean, which could potentially bring in avariety of disasters, such as earthquakes, tsunamis, volcaniceruptions, and landslides. In such a situation, there is no singlecountry in the world to feature completely Indonesia earthquake riskthreats.Indonesia is a highly active tectonic zone due to three plates of the worldand nine other small plates meet in Indonesia and establish pathways ofcomplex assembly plates (Bird, 2003). The existence of interactionsbetween these plates placed over Indonesia as the region is prone toearthquakes (Milson et al., 1992). The high seismic activity was revealed bythe record where in the span of 1897-2009, there are more than 14,000earthquakes with magnitude M> 5.0. Incidence of major earthquakes (mainshocks) within the period.
  8. 8. Recorded a variety of activities the massive earthquake in Indonesia Aceh earthquake accompanied by a tsunami in 2004 (Mw = 9.2) The 2005 Nias earthquake (Mw = 8.7) Yogyakarta earthquake in 2006 (Mw = 6.3 ), Tasik earthquake in 2009 (Mw = 7.4) Padang earthquake in 2009 (Mw = 7.6) Bogor earthquake 2012 (Mw = 4,8) Earthquakes have caused thousands of casualties, collapse and destruction of thousands infrastructures and buildings, as well as billions dollars of funds for rehabilitation and reconstruction.
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  10. 10. The earthquake is one of the natural disasters that often occurs inIndonesia, Indonesia is due to its location on the region is still unstablestate of the soil layer so that the movement of the earths surface layercalled tectonic processes. In addition, many active volcanoes are widelyscattered throughout the area of Indonesia could erupt at any time.Earthquakes unpredictable, the experts can only know the position anddirection of plate movement, but can not know for sure when the platesare met that will meet and cause vibration as an earthquake. Earthquake did not cause death, but due to damage to the building that can lead to loss of life. On the surface, the vibrations can cause damage and collapse of buildings so as to cause fatalities. Tremor can also trigger landslides, rock debris, and other destructive land damage settlements.
  11. 11. Economic losses caused by the earthquake in Indonesia
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  13. 13. Yogyakarta provide new strategic step to change the paradigm, disaster reliefand post-disaster emergency management into disaster prevention andmitigation. Greater attention to the need for expansion of disaster relief effortsthan reactive measures through emergency response and post-disastermanagement, with more attention to preventive measures through disasterpreparedness and mitigation has been stated in Law No. 24 Year 2007 onDisaster Management and derivatives regulations .Tectonic earthquake measuring 6.3 on the Richter scale occurred on May 27,2006 at 5:55 pm with the epicenter at 37.6 kilometers south of the city ofYogyakarta at a depth of 33km felt across parts of Yogyakarta and CentralJava, has claimed most of the victims were not small. Recorded number ofvictims who are dead 5737 people (4674 people in Yogyakarta and CentralJava 1063 people), serious injury / light 38 423 people (19 897 people in 5Yogyakarta and Central Java 18 526 people) and tens of thousands of peopleforced to live in temporary shelters (displaced).
  14. 14. The probability of earthquake occurrences is difficult to predict when andbased on a count of repeated seismic events, make all parties always bealert to all the possibilities that occur. disaster is always closely related tofinancial problems which are the problems faced by individuals asfamilies, as communities, local and national governments and even theworld. Seismic events recorded 7% probability is very small than drought43%, but still watch out for the impact caused can be considerable when it isnot accompanied by mitigation efforts (Source:
  15. 15. 3 INSURANCE FOR DRRThe risk always involves two terms : uncertainty financial loss opportunities A risk of an uncertain event do risk sharing joint efforts of various parties to the financial burden becomes lighter. Financial Risk is a fixed price for each particular risk due to the earthquake. It is not enough to just financial settlement, but also the business community capacity building is needed in disaster risk reduction.
  16. 16. 5. Preparedness : 6. Early Warning 1. Relief, Rescue & Prepare/reduce the impact of Building comm. Awareness Emergency Response ND  Disaster Prediction Golden Hours stage  Warning system testing  Using Warning System  Quick response  Educating& training  EW information  Better Equipments  First aid training, Practicing  EW comm../dissemination Disaster  Profess. Human Res.  Guiding emergency response  Crisis Management Plan  Strengthening Com. Based  EW implementation 6  Crisis Management Act  Logistics, stockpiling 5  Refugee Management 1 Disaster A 4 Disaster Management Cycle Disaster B Disaster C ……….. 2 2. Rehabilitation & 4. Mitigation : 3 3. Prevention : ReconstructionEliminate/prevent impact of ND Reduce/avoid long term risk Effort in re-functioning/strengthening Setting of Mitigation Plan  Hazard, Vulnerability and Risk basic service Advocating policies analysis  Infra structure damage Educating, training  Hazard/land use zoning  Structural damage Networking, disseminating  Publishing Codes, Maps  Economic damage Preparing resources  Building Data Base  Mental damage  Research, dissemination  Environmental damage  Disability of people Source : MTS FTSP UII
  17. 17. these risks are at least 5 (five) ways to do :1. Risk avoidance2. Risk reduction3. Risk retention4. Share the risk (risk sharing)5. Transferring risk (risk transfer).This last way of handling risk is most closely related to insurance, the risk transfer Earthquake insurance is one way to protect one of your most valuable assets: HouseTransfer risk means the risk of loss transfer to another, usually an insurancecompany that is willing and able to bear the burden of risk. Assignment ortransfer may be speculative risk and pure risk. Replacement guarantee againstbreakage due to losses in this case are the physical building at least make usmore secure. The risk of financial loss is lighter because of the insuranceguarantee.
  18. 18. Insurance as one of disaster risk reduction is not the onlysolution, but it should be coupled with an increased capacity ofthe importance of disaster risk reduction efforts.The Republic of Indonesia act no. 24 of 2007 “PenanggulanganBencana” Disaster Management paradigm shift which wasoriginally the responsibility of the government be a sharedresponsibility.Various parties have a role in disaster risk reduction efforts thatcan happen anytime. Government, private sector and individualshave the same role in accordance with their capacity.
  19. 19. The contribute of private sector in this regard is the insurance industry with earthquake insurance services. Earthquake insurance to be an effective tool in mitigation efforts. Insurance provides financial security during the earthquake.Insurance also assist the government in terms of financing inthe event of a disaster by providing insurance claim if thehouse is collateral damage. Besides insurance also empowerpeople to be more independent in preparing financial problems
  20. 20. 4 EARTHQUAKE INSURANCE PREMIUMS AND BENEFITThe benefit gained by the community with earthquake insurance coverage,will get a warranty replacement of the reconstruction cost worth the price ofthe building before the damage occurred. The premium to be paid is verysmall compared with the risk borne by the insurer. Easy terms and benefitsas one of the reasons for the increased interest of the community to thisday. Not just about disaster-prone locations such as Bantul district, but inthe city of Yogyakarta and district sleman.Convenience provided by the insurance company to pay a premium in theamount ranging from 1.5 ‰ to 2 ‰ of the value of buildings making up theenthusiasm to buy earthquake insurance policies are packaged in a singlepackage with fire insurance. For example Yogyakarta included in zone 4, if therate is 1.5 ‰ estimated construction value of Rp. 200.000.000, - the ownerssimply pay a premium of Rp. 300.000, - Benefit obtained during anearthquake and the house was severely damaged even to the ground, theinsurance company will provide a maximum claim amount of the building afterthe deductible or deductible at your own risk that only 10% of the value ofcollateral, the homeowner will receive Rp. 180 000 000,
  21. 21. EI is automatically includes guarantees in case of fire, medical expenses for theinsured and include the cost of temporary housing if the object can not beoccupied. Convenience provided by the insurance company to pay a premium inthe amount ranging from 1.5 ‰ - 2 ‰ of the value of buildings making up to buyearthquake insurance policies. They are packaged in a single package with fireinsurance.For example Yogyakarta included in zone 4, if the rate is 1.5 ‰ estimatedconstruction value of Rp. 200.000.000, - the owners simply pay a premium of Rp.300.000, -Benefit obtained during an earthquake and the house was severely damagedeven to the ground, the insurance company will provide a maximum claim amountof the building after the deductible or deductible at your own risk that only 10% ofthe value of collateral,the homeowner will receive Rp. 180 000 000,
  22. 22. The earthquake insurance premiums based on 2 things, the earthquake zoningand building type.Insurance officer will survey the location and saw the conditions whether it isfeasible or not insured.EI is automatically includes guarantees in case of fire, medical expenses for theinsured and include the cost of temporary housing if the object can not beoccupied More vulnerable = more higher premium Earthquake Insurance Rates In 2010/ AAUI
  23. 23. Indonesian Earthquake zone 2002
  24. 24. 5 UNDERWRITINGEarthquake insurance to guarantee the financial security to the value ofthe buildings and the handling of the economic recovery in Indonesiaearthquake insurance scheme has not been fully implementedUnderwriting acceptable decision whether or not for the insured is still veryweak. When you look at the regulations in force in Indonesia has noregulations on Standards of ISO 1726 2002 Planning for EarthquakeResistance and Non-Building Structures Building Permits and paperworkof Building (IMB) equipped with a blue print of the plans.Code of buildings for earthquake resistance structure plan covers all thefoundation, Sloof, columns and beams and roof construction planning.Structure as the main pillar of the resistance of a particular building can not benegotiable in the implementation should be according to the rules andregulations. Insurance does not look too deep a few things. But if there is aclaim, the insurance company will assess the suitability of new constructionwith the initial description of insurance coverage at the time.
  25. 25. Another factor not considered in the underwriting process is the age of thebuilding.How old age insurance covered buildings remain, except for heritage buildings.Age building will obviously affect earthquake resistance factor.The longer the age of the building may be the stronger or the weaker dependingon the material used
  26. 26. 6 COMPLIANCE WITH CURRENT CONDITIONSThe question that then arises is whether the earthquake map is stillrelevant or urgent to be fixed?Since the publication of SNI 03-1726-2002, there have been several majorearthquakes in Indonesia, which has a magnitude greater than the maximummagnitude than previously thought, such as Aceh Earthquake (2004), NiasEarthquake (2005) and Jogja earthquake (2006).Earthquake insurance provides greater convenience and financialbenefits. insurance also help the earthquake disaster risk reductionefforts made by the public are aware of the disaster on their own
  27. 27. Code 2002 Code 2010Soil conditions are calculated Soil conditions in the latestbased on the code 2002 only draft IEC grouped intodivided into 2 (two) types of 3 categories, namely hardearth ground hard (hard) and (hard), moderate (medium),soft ground (soft). and soft (soft).In planning of the building, has been agreed that the newIndonesian earthquake maps will be prepared based on the datathe most current seismicity, the results of recent research onseismotectonic conditions in Indonesia, and to use the analysisof 3-D models with reference to the International Building Code2009 (IBC 2009) in which the IBC 2009 using probabilityexceeded 2% for the building service life of 50 years (a period ofover 2475 years earthquake) as the basis for determining thedesign earthquake.
  28. 28. EARTHQUAKE INSURANCE THREATS OF DISASTER RISK REDUCTION EFFORTSThe role of insurance as a form of mitigation wasinitially expected to drive the implementation of theregulations for the conduct of earthquake resistantbuildings in accordance with the applicable code mustnot ignore the factor structure planningDiscourse earthquake insurance in Indonesia has not been fullyimplemented. Most people do not realize what the significance ofinsurance. Educating the public is still needed to provide knowledgeawareness of disaster mitigation is one such earthquake insurance.For it is necessary to set up the Natural Disaster Risk Insurance Teamin charge of, among others, held a socialization or public awarenessof insurance to employers and insured people about the risks ofnatural disasters especially earthquakes, gathering of information anddata relating to the risk of earthquakes and perform the review/evaluation or reviews the policy closure earthquake risk.
  29. 29. 7 FACTS FINDINGSEarthquake insurance is an extention of the fire insuranceInterview with responde name : Mrs. MarryLocation: Jl Wonosari – Mojosari• She takes a earthquake insurance becaused location where herfamily lives is on the site of earthquake.• She purchased quake policies because the house is on the locationof the earthquake fault lines (Fault Opak).• She is not registered as a local resident. So if there is the possibilityof an earthquake is not getting help from the government. (diffresident card location)
  30. 30. Interview with responde name : Mrs. Tatti Location: Sewon Bantul • Participate as awareness of the benefits of insurance for life • He works in insurance • Premiums 1.5 permill a small value compared with the risk Age building is not considered
  31. 31. Interview with responde name : Mr. AgusLocation: Jl Karang kajen Yogyakarta„Bakso” meatball sellers• He did not know what it is earthquake insurance• Interested in taking part if easy claims process• Premiums are still affordable compared to the level of risk
  32. 32. 8 QUESTIONS and DISCUSSIONWhat’s your opinian that insurance becomeone of disaster risk reduction efforts?The insurance premiums are relatively lower,Can be an advanced moral hazard for disasterrisk reduction efforts?How does earthquake insurance cover the lower class?How the ideal system of earthquake should be examined inIndonesia..??Does the government covered the earthquake insurancehouse??