INSURANCE AAS A TOOL OF

DISASTER RISK MANAGEMENT

M
INDONNESIA

Frans Y. Sa
ahusilawane

PT Asuransi
PT. A i MAIIPARK IIndonesia
d i
31 Marcch 2011
Why Insurance?

• Protecting the People

• Relieving the Pressure on the State Budget
• Promoting disaster-resilie
ent community
• Strengthening
St th i theth Basic
B i Foundations
F d ti off
Indonesia’s
Indonesia s Insurance Ind
dustry
PENING REMARKS
he present is The Key to the Past”, excclaimed James Hutton, the Father of t
eological Sciences, more than 100 yea ars ago.
eaning
i ththatt the
th geological
l i l processes iinn the
th pastt followed
f ll d along
l th
the same pa
the present day processes (this is righ
ht to a certain extent)

eat catastrophes which happened in the past will recurr, although we do no

ow when.

e Krakatau Great Eruption in 1883 wa as due to the collapse of the volcanic b

100 years ago), creating the present day
d Krakatau Caldera.

ere same event could have happened

d before, this could have happened be
in 416 AD (NOAA) and in 523 AD (Wo
ohletz).

is same phenomenon could happen againa in the future. If it does the losses
man lives, dwelling houses, buildings,, infrastructures could be many fold.
TOPICS TO BEE DISCUSSED
TOPICS TO BE
E DISCUSSED
I
I. Earthquake Rissk in Indonesia

II. Legal Aspect

A

III. MAIPARK : Establishm

ment & Achievement

IV. Risk Management of

o Natural Disaster
TOPICS TO BEE DISCUSSED
TOPICS TO BE
E DISCUSSED
I Earthquake
I. E th k Ri
Risskk iin Indonesia
I d i
II. Legal Aspect
A

III. MAIPARK : Establishm

ment & Achievement

IV Risk Management of
IV. o Natural Disaster
’s and Indonesia’s Earthquake Epicenter Map
p
rthquake with Magnitude > 5.5 (1964 – 20100)

st 20% of Damageable and tsunamigenic

quake Occurred in Indonesia.
EARTHQUAKE HAZ
ZARD IN INDONESIA

Earthquake
E th k occurrences iin In
Indonesia
d i for
f
magnitude more than 5,0.

O
Overall,
ll it is
i rising
i i ini number
b r since
i year off 2000.
2000
 L A l EQ 1987
Los Angles EQ, 1987 Mexico City EQ, 1985
i Ci Q 198

Yogyakarta EQ, 2006
gy ,

picenters could brutally hit cities.

ty is the most significant case, whereas 350
0
rthquake’s hypocenter distance destroyed
ings completely.
completely
ONOMIC LOSSES AND HUMAN CASUALTIE
ES DUE TO EARTHQUAKE 2004 – 2010 (Ju

Economic Loss 
Economic Loss Insured Lo
Insured Lo
arthquake Events Date Magnitu
ude Casualties
(million USD) US
26.11.04 7.2 31 55.00 

unami 26 12 04
26.12.04 92
9.2 126 732
126,732 5 00
5.00  6

28.03.05 8.6 905 668.00 

10.04.05 6.7 0 22.20 

q 26.05.06 6.3 5,749 3.10  2

Eq 17.08.06 7.7 637 17.50 

06 03 07
06.03.07 63
6.3 67 167 00
167.00 

12.09.07 8.4 25 164.00  1

26.11.07 6.7 3 8.80 

07.08.08 5.7 0 12.90 

16.11.08 7.3 1 380.00 

Eq 04.01.09 7.6 4 320.00 

sikmalaya) Eq 02.09.09 7.2 81 790.00 

a (Padang) Eq
( d ) 30.09.09 7.6 1,117 2,080.00  9
TOPICS TO BEE DISCUSSED
TOPICS TO BE
E DISCUSSED
I
I. Earthquake Rissk in Indonesia

II Legal
II. L l Aspect
A t
III. MAIPARK : Establishm
ment & Achievement

IV. Riskk Management of

of Naturall Disaster
 LEGAL ASPECT
A

Law Number 24/2007 :

National Disaster Manageme
ent.
ent

Government Regulatio
on Number 21/2008 :
Implementation of National Disaster
D Management.
ASTER MANAGEMENT
T LAW OF INDONESIA

saster Management Law of Indonesia Number 24/2007

overnmentt Regulation
R l ti Number
N b 21/2008
2 mention
ti that
th t :

he Government encourages the participation from Private Secto

e national risk management.

aw Number 24/2007 section 28, 29, 57, 59 and Govern

egulation
l ti Number
N b 21/2008 sectio
tion 67,
67 75,
75 87)

he law stated that the BNPB is the sole agency to perform disa
anagement (Ministerial level).
ASTER MANAGEMENT
T LAW OF INDONESIA

he Government of Indonesia has the obligation to protect

tizens against any disaster.

his Law stipulates that every Indonesian citizen has the ri

be protected against any dissaster.

ncourages the participation of

o private sectors in national
saster management program ms.
ms
 TOPICS TO BEE DISCUSSED
TOPICS TO BE
E DISCUSSED
I
I. Earthquake Risk in Indonesia

II. Legal Aspect

MAIPARK : Establish
hment & Achievemen
IV. Riskk Management off Naturall Disaster
ONESIAN EARTHQUAKE REINSURANCE PO

y Indonesian Earthquake Reinsurance Pool (IERP) 
Established in December 2002, start opeeration 1st January 2003
{ Decree of Directorate General of FFinancial Institution, Ministry of Finance
ÙNumber : SE‐1505/LK/2002
: SE 1505/LK/2002 2
ÙDate : April 12
2, 2002

y PT. ASURANSI MAIPARK INDONE
ESIA
Established in December 2003, start operaation 1st January 2004
{ Decree of Director General of Finan
ncial Institution, Ministry of Finance
Ù Number : SE-6047/LK/20 003
Ù Date
D : November
N b 11, 20 003
T. ASURANSI MAIP
PARK INDONESIA
SSION STATEMENTS

To promote proper handling of earthquake insurance in indonesia

surance industry

To collate statistic, p
prepare
p nationwide database and risk profile
p

To do research and studies on earthqu

uake risk and related matters

To generate local capacity

SURVEYS AND RESE
EARCHS BY MAIPARK

• seismological researcch
• Earthquake
q intensity
y survey
s y
• Geophysical and Geo ological survey
• Catastrophe model:
• Earthquake and Flood d hazard
 Cities along west cost of 
Sumatra facing the subdu
Sumatra facing the subdu
earthquake and tsunami 

Cities along Barisan Mou
Ci i l B i M
facing the shallow earthq
due to Sumatra Fault acti

Simple Explanation

Sumatra Oblique Subd

Mentawai thrust fault

Segment of Sumatra Active Faults, Sumatra fault zone

Their Fractal Dimensions and Seismici
Their Fractal Dimensions and Seismiciity (From Left
Geological Survey at Sumatra
Site: Bukit Tinggi West Sumatra
Site: Bukit Tinggi, West Sumatra
Cummulative numbers of 
earthquake occurrences in Sumatra 
f
fore‐arc (1964 –
(1964 2009)
 SUMATRA FAULT ZONE
ght lateral

nalogous to the San Andreas Fault in C

California

ot one single fault, but a fault zone, bro

oken into >13 segments

50 km (Banda Aceh-Semangko Bay in

n Lampung)

dissects the Barisan Range

on top of the Barisan Range:
volcanoes acid volcanoes
volcanoes-acid
n numerous places there are sand layyers-water saturated sand layers

great potential for liquefaction. Dangerrous for buildings and infrastructure

Geological Survey at Sumatra
Si
Site: Kepahyang Regency, Bengkulu
h k l
ARTHQUAKE SURVEY, 7 AUGUST 2008
adindi Atas, Kec. Pekat
M 5.7

DOM
MPU EARTHQUAKE SURVEY, 7 AUGUST 2008
Site: Desa Kadindi Atas, Kec. Pekat
Earth
hquake: M 5.7
Gravity Survey at Gorontalo
Site: Tolingula, Gorontalo Province
Fault Line
Subduction
Epicenter
 Bantul,, which was mostlyy devastate
during the 2006 earthquakes, due to
26 soft foundation of the rock, where t
seismic waves acquired a strong
Bantul 
a tu amplification.
Regency
Southeastern part of Mount. M
It consist of lava flow, pyrocla
and laharic deposits.
Limestone deposits from Mount

150.000 rumah River deposits from the Opak R

Wonogiri Reef limestone, calcarenite.

Regency
Limestone and marlyy sandston
deposit from Setolo formation.
Andesitic breccias, tuffs, lapilli

Unsorted debris from Kebobuta

1.750
0  At top right : remnants of the o
Eq Epicenter Rumah
halfly surrounding the young co
Mount. Merapi.p undiferrerentiat
ashes, breccias, agglomerate a
flows. This are young volcanic
Mount. Merapi included solid la
from Mount. Merapi, extension
tongues protruding from the cr
stivity profile across Bantul area (Yogyakarta, Central
ometers thickness of soft sediment beneath In the other hand,
hand only 81 casua
mplificated the earthquake wave, 4.143 Gunung Kidul, altough it is pos
s in Bantul. closer to earthquake epicenter.

BANTUL GUNUNG KIDUL

Bantul Gunung Kidul

6.3 SR
Q Epicenter

41 rumah

1.365 rumah

D O N E S I A

Zoom Area
Dompu
D Earthquake, Sumbawa. August 7, 2008.
M 5.7 (Depth 10 km). This erthquake destroyed 1.396 dw
elling houses in Moyo Island, even though closer to o the epicenter, are less damaged compare to thos
D
Dompu, which
hi h are llocated
d off llose volcanic
l i pyroclas
l stic
i ddebris
b i ffrom M
Mount Tambora.
T b
e Seismic Waves obtained a strong amplification.
land however is built up of reef limestone.
 EQ
Q Epicenter

QUAKE SURVEY, 7 AUGUST 2008

Pekat, Dompu
7 Dompu Earthquake, Sumbawa.
7, 2008. M 5.7 (Depth 10 km).

DOMPU REGENCY (50 – 100 Km

Epicenter):
1.365 Unit Dwelling
g Houses Me
Heavy Damage
11 Injured
g
2000 Refugees
QUAKE SURVEY, 7 AUGUST 2008 DOMPU EARTHQUAKE SUR
RVEY, 7 AUGUST 2008
Dompu Site: Kadindi Village, Domp
pu Data Source: BNPB (August 11,
7 Earthquake: M 5.7
 Dompu Earthquake, Sumbawa
7, 2008. M 5.7 (Depth 10 km)

MOYO ISLAND (Epicenter Are

41 Unit Dwelling Houses Med
Heavy Damage
3 Injured

HQUAKE SURVEY, 7 AUGUST 2008 DOMPU EARTHQUAKE SUR

RVEY, 7 AUGUST 2008 No Refugee
aji, Moyo Island Site: Labuan Haji, Moyo Isla
and
5.7 Earthquake: M 5.7 Data Source: BNPB (August
( 1

EQ Epicenter

HQUAKE SURVEY, 7 AUGUST 2008

aji, Moyo Island
5.7
57
Earthquake; Jakartaa
and
dSSurrounding
di A Area
South
S th Java
J Seism
Seismi
S i mic
i G
Gap
aleo-tsunami Resea
arch

ung
g Kidul Surveyy Sites Site BRN
aleo-tsunami Resea
arch

Site KRK-02
aleo-tsunami Resea
arch
ndings : (1)
Some areas along
S l th
the South
S th Coast
C t off Java
J are tsunami
t i
prone. The inlets, bays, and low land regions.
regions

Not the entire coastline are tsunami p prone Even thoug

prone. g
arge earthquake occur off sh hore. Due to the morphology
he coast. Some areas are be eing
g “protected”
p by
y small
mestone hills (bio-herm) whiich might provide save area
he p
people
p to run to during g tim
mes of emergency.
g y
 ndings
di : (2)
early warning system” is really and hardly 
ded, even as primitive tower with human 
even as primitive tower with human
ervers on the watch is good enough than 
e. Unfortunately this system is only 
ctive at day time
ctive at day time.

wall” of sea waves can be seen approaching 
shore and there is time 
shore and there is  enough  for the 
time “enough” for the
ervers to sound the alarm and to climb 
n the tower to save them self.

eding the tsunami waves more often than not, the sea can be seen receding from the beach. A
ches of beach could run dry. Please remember the local wisdom of local people of Simelue : “if
ding run to higher ground”. We must use this to te
each people (children, vacationers, swimmers) 
is very important for vacationers (bathers, swimmmers and children playing in the water)

whole things can only be done if we have an earlly warning system. This we have not. But the local
munities can erect bamboo observation towerss near the beach and having same people watch
all the time and warn people of the impending d danger.
M
Merapi
i Eruption;
E ti Su
S rvey off damaged
d d ar
CATASTROPHE MOD
DEL - EARTHQUAKE

Hazard

Vulnerability Loss

Inventory

PADANG EARTHQUAKE 30/09/09

DAMAGE ESTIMATION WITH CATASTROPHE MODEL

Earthquake
M5.7 (Dep
April 16th, 2009 (08:03
Intens

I II III IV V VI VII VIII IX X

MAIPARK Catastrophe Modeling estimated

Billion of losses from Palu Earthquake. This ea
occurred from Palu – Koro Fault
 FLOOD AND FLOODING

ooding
di h has b
become a very menacing
m i problem
bl iin IIndones
d

terms of money the yearly lo

osses due to flooding have
xceed the losses due to earth
hquake
q

AIPARK starts studying this

this, and starts to build a databas
ARK s FLOOD  CAT MODEL
ta as a Pilot Project |

in Indonesia
Indonesian Flood Catalogue during 2002-2009*

ood
od
ood
Flood Catalogue in Java Is

140 135
Jakarta
107

44
34
200
11
20
4 15 19 12
8
E-ELIMINARY
E ELIMINARY STUDY: FLO
OOD HAZARD
MODELING
MAIPARK starting to build a 
catastrophe model:

Flood Hazard Mode

We cooperating with various
institution related to metero
hydrogeology, planology, geo
URST
and other earth sciences.
GRESIK

This model hopefully would 
TUBAN
LAMONGAN
for mitigation and risk mana
d
due to flood hazard.
fl d h d

OJONEGORO
River Floo
Pote
Administrative Floo
Border
isk Awareness Cam
mpaign
Conducted inn 292 sub‐villages 
in Bantul Disttrict, Yogyakarta 
in Bantul trict Yogyakarta
Province, 20008.

Attended by 12,000 participant 
 TOPICS TO BEE DISCUSSED
TOPICS TO BE
E DISCUSSED
I
I. Earthquake Rissk in Indonesia

II. Legal Aspect

A

III. MAIPARK : Establishm

ment & Achievement

V Risk Management of Natural Disaster

V.
THE NECESITY ANDD URGENCY OF
HAVING A RISK MAN
NAGEMENT
PROGRAM

INDONESIA HAS EVERY REASON

R TO PERFORM IT
MORE ECONOMICAL THRROUGH AN INSURANCE
SCHE
EME

o far
far, all risk financing te
echniques rely solely o
state budget
b
OST-DISASTER SPENDING 2001 - 2007
on USD
1,278 

1,112 

176 
67 
4
4  15 

2001 2002 2004 2005 2006 2007

PRE-DISASTER SP
PENDING 2001-2007
on USD

0  262 

232 
0 

0 

136 
0  114 
97 

0  62 
62

0 

‐
2001 2002 2004 2005 2006 2007
K MANAGEMENT OF
F NATURAL DISASTER
RTHQUAKES

INSURANCE PROV VIDES A BETTER

ALTERNATIVE IN FINANCING RISK OF
NATURAL D DISASTER !
 How Indonesian In nsurance Industry
Prepare Itself to Pa
articipate in Natural
Disaster Risk Management
g

Other Countries : Insurance

e industry and government
sponsored insurance schem me only a response after
occurence of a big earthquak
ke causing serious damage

ndonesia: Insurance superviisory authority and insurance

industry prepared themse elves long before serious
earthquakes hit Indonesia
MPARATIVE OVERVIEW OF IND
DONESIA AND COUNTRIES HAVI
AN INSURANNCE SCHEME

Indonesia Land Area: 5,193,166 Km

5 Biggest Islands
Kalimantan : 539,460 Km2
S
Sumatra:
Sumatra
t : 473
47 3,606 Km2
Papua: 421,952 Km2
Java::
Java 132,035 km2
Sulawesi: 89,035 km2

Japan New Zealand

394,744 Km2 268,671 Km2 Taiwan
Only 83% of Only 57% of 32,261 Km
 CRESTA Zone 3 of Indonesia
West JJava,, Jakarta
J and Banten
Total Area :
44.718 Km2
Total of Residential :
9.839.878 Units

CRESTA Zone
Z 5 of Japan
Tokyo, Yoko
ohama and Chiba
Tota
al Area :
9.601 Km2
Tota
al of Residential :
12.491.692 Units
 CRESTA Zone 5 of Indonesia
East Java
J
Total Area :
47.922 Km2
Total of Residential :
9.873.440 units

CRESTA Zone
Z 8 of Japan
Osaka, Kyoto
o and Kobe
Tota
al Area :
27.091 Km2
Tota
al of Residential :
8.676.647 Units
 EARTHQUAKE INS
SURANCE SCHEME

eatures of Required Earth
q hquake
q Insurance Scheme

– The crux of the matter:
Th f h
• Quick response to asses the damage (w
within two weeks after area accessible)
• Quick claims payment (two weeks afte
Q i k l i t (t k fter assessment)
t)

– Deployment of nation widee insurance network necessa

– Strong local and internation
nal capacity needed
 TACTICS AND
D STRATEGY

Cenntral and Provincial Government

MAAIPARK and Indonesian

MAIPARK Insuurance & Reinsurance Companies

•Muunich Re
•Swiss Re
•AC
ACCR
•AOON-Benfield
•Inddonesian reinsurance companies

ull Applications
pp of the PPP Principle
p e and the Corporate
p Social Respons
p
 CONCLU
USSION
lmost 20% of world’s damageable and tsunamigenic earthquake
ccurred in Indonesia
Indonesia.

he increasing g tendency y of g
goverrnment spending
p g in p
pre- and p
post
isaster relive effort already create heavy burden to the state budg

is therefore imperative that Indo

onesia should be able to perform
more efficiently in risk managemeent performances.

hrough establishment of IERP (22002) and MAIPARK (2003),

ndonesian insurance industry is rready to contribute in the nationa
sk financing program.
Thank
k You