World's First Microinsurance Flood Cover in Indonesia
Aglionby, J.

Munich Re has launched the world’s first microinsurance flood cover in Jakarta, targeting millions of poor people living in 24 regularly inundated districts of the Indonesian capital. The group, which is working with insurer Asuransi Wahana Tata and GTZ, says the year-long pilot project is primarily a corporate social responsibility scheme. If it takes off, it should make money within three years and will be extended nationally and overseas. Experts say it could be a way to educate an underinsured country about the industry.

With severe weather becoming more frequent and sea levels rising, providing flood insurance to poor people is going to become increasingly important. Data from Munich Re, which has one of the world’s largest databases on natural disasters, show the number of weather disasters in Asia has risen from 75 in 1980 to 275 in 2007. The losses from these events, in 2008 values, rose from US$5 billion to US$45 billion in the same period.

Kua Ka Hin, Munich Re’s south-east Asia chief executive, said: “The key to this is that it is a trigger-based (and not open to interpretation), affordable, easily understandable and unbureaucratic product that is easily claimable.” Residents in the pilot districts can buy as many IDR50,000 (US$4.80) insurance cards as they wish during the dry season months of May to October. If, during the following rainy season, the water level at the Manggarai flood gate on the Ciliwung River reaches 950cm, each card can be exchanged for a one-off payment of IDR250,000 (US$24). The cards are valid for a year.

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