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Focus Group Discussion on Disaster Risk Financing and Insurance




On July 9 th 2019, RDI in collaboration with Indonesia Disaster Management Agency (BNPB) directorate for disaster risk reduction and Bandung Institute of Technology (ITB) held a Focus Group Discussion on the theme of “Increasing Capacity and Sinergy for Disaster Risk Insurance”. The FGD was held in BNPB’s building in Jakarta. Participants of the FGD include representatives from BNPB, Bandung Institute of Technology, Gadjah Mada University, Indonesia Ministry of Finance’s Fiscal Policy Agency (BKF), PT Maipark Reinsurance, the General Insurance Association of Indonesia (AAUI), the World Bank, Indonesian Red Cross Society (IFRC), Deloitte Indonesia, etc. The event was opened by Dr. Raditya Jati, BNPB’s Director for Disaster Risk Reduction, followed by opening remarks by Dr. Saut Sagala. The event consisted of four presentations: Hengki Eko Putra from PT Maipark Reinsurance, Dr. Saut Sagala from Bandung Institute of Technology, Prof. Indra Bastian From Gadjah Mada University, and the head of BKF Centre for Regional and Bilateral Policy: Irfa Ampri, Ak., C.A., Ph.D. The first speaker was Hengki Eko Putra who elaborated on the potential and effectiveness of insurance for disaster risk financing. Putra provided evidence that disaster insurance would ease the burden of the stage budget by presenting his research which provided a benefit cost ratio and comparing two scenarios: where the government covered earthquake risk through insurance (2004-2018) and where the government does not provide insurance coverage. The B/C ratio calculation has yielded a value of 2,024 as a result of cost and benefits (B/C) highlighting seven major disaster occurrence which had damaged more than 100,000 houses. Furthermore, he emphasized on the importance of insurance since there is a financing gap as many as 228 trillion IDR while the government only allocated 4 trillion IDR. This means that there’s a substantial financing gap which requires Indonesia to look for alternative financing sources, including insurance.



Picture 1. During Discussion

The second speaker was Dr. Saut Sagala which elaborated on the existing conditions concerning the implementation of disaster insurance and existing challenges that had obstructed the implementation of disaster insurance especially for the protection of community housing. Furthermore, Dr. Sagala presented several recommendations to support the implementation of disaster insurance for community housing: (1) the need for a legal-technical instrument; (2) prioritization of insurance for dwelling houses; (3) decentralization; (4) the formation of a task force, and (5) stated that the implementation of disaster insurance for community housing must be implemented in parallel with the implementation of insurance for state assets. The FGD then proceeded to the third speaker which is the head of BKF centre for Regional and Bilateral Policy: Irfa Ampri, Ak., C.A., Ph.D. As a representative from the Ministry oF Finance, he thoroughly presented on the recently formulated disaster financing and insurance strategy and also elaborated on several newest update of future steps that would be taken by the government in regards to disaster financing. The last speaker of the session was Prof. Indra Bastian from Gadjah mada University. Prof. Bastian emphasized on the importance of financing in the golden hour phase during disaster response and that spatial planning is one of the key of determining the potential value needed for disaster financing of specific occurrences. The FGD then proceeded to the discussion session where participants of the FGD were given chances to state their opinions and the FGD was concluded with a closing remark by Dr. Raditya Jati and the participants and speakers agreed that this FGD would be just one minor step towards a more prolonged and programmed implementation of alternative schemes for disaster financing.


Picture 2. Dr. Saut Sagala