Insurance firms plan mediation body

The Jakarta Post ,  Jakarta   |  Mon, 05/15/2006 12:28 PM  |  Business

The Jakarta Post, Jakarta

Insurance customers will soon be able to get easier, faster and cheaper solutions to their claims disputes with insurance companies, after the establishment of an independent mediation body.

Under an agreement signed Friday in Jakarta, 150 insurance companies are committed to establishing an arbitration agency to mediate disputes between insurance companies and customers. The agency will handle claims with a maximum value of Rp 500 million (US$57,240) for general insurance and Rp 300 million for life and social insurance.

""After the establishment of the agency, to be called the Indonesian Insurance Mediation Bureau (IIMB), insurance customers will no longer need to go to an arbitrator or court, which is usually costly and takes quite a long time,"" insurance industry director Firdaus Djaelani of the Finance Ministry told reporters after the signing of the agreement.

The chairman of a team preparing for IIMB's establishment, Kornelius Simanjuntak, said the bureau would provide free services for customers. The claims should be submitted no more than six months after rejection by insurance companies, and on the condition that the dispute has not been submitted to an arbitrator or court.

The whole settlement process will be kept confidential, he added.

Kornelius said the bureau would operate independently under the supervision of government officials, local experts, lawyers, former judges, consumer representatives and insurance industry executives.

He explained that the bureau's decisions would be binding to insurance companies' policyholders, if they accepted the decisions.

""If the policyholders do not accept the decision they can bring their cases to district court or an arbitrator,"" he said.

However, customers who want to use the bureau's free services will have to wait for few months because some preparation is needed before it can open.

New IIMB chairman Arizal E.R. said a team was preparing equipment and an office building, as well as human resources including qualified staff.

""We expect to complete the preparations by September,"" he said.

To finance its operation, IIMB will need an annual budget of up to Rp 2.5 billion, which will be obtained from insurance companies' contributions.

""The maximum contribution is Rp 50 million for a big insurance company whose premium income reaches Rp 1 trillion a year. Small insurance companies may pay only Rp 2.5 million per annum,"" Firdaus said.

According to data from his office, there are 24 million insurance customers in Indonesia or 12 percent of the country's total population.

Firdaus added his ministry received 30 insurance complaints last year. (07)

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