T

he National Disaster Mitigation Agency has proposed an insurance scheme for damaged assets in anticipation of natural disasters that could overburden the state budget.

Speaking about the recent earthquake that devastated Padang and Pariaman in West Sumatra, it said on Monday that the government had to spend trillions to finance the post-disaster reconstruction and rehabilitation works.

The agency's chairman, Syamsul Maarif, said the government had to spend Rp 7 trillion (US$745 million) on the reconstruction of damaged houses in West Sumatra, and Rp 1.7 trillion on similar work in Tasikmalaya, West Java.

A 7.9-magnitude earthquake hit Padang on Sept. 30, claiming hundreds of lives, while the 7.3-magnitude earthquake that rocked Tasikmalaya on Sept. 2 killed dozens of people and displaced thousands of others.

The House of Representatives had approved Rp 172 billion for the agency's budget in 2010.

He said the amount was far below that required for reconstruction after potential disasters.

"If we can solve huge spending problems for disasters through an insurance scheme, we will try it," Syamsul told reporters during a press conference in his office in Jakarta.

Syamsul said he would talk to the Indonesian General Insurance Association in the near future, as he needed to cooperate with the association to ensure there was a possible scheme that would be beneficial for the government in the long run.

The agency's proposal flies in the face of common logic that no insurer honors claims for damages caused by so-called "acts of God" - of which earthquakes are most definitely a part.

Separately, the agency's spokesman, Priyadi Kardono, said the insurance was likely to cover damaged buildings in residential areas.

"The government has to shell out a lot of money for the rehabilitation and reconstruction work," he said by telephone.

"We expect to implement the proposed insurance scheme next year to save our state budget," he said.

He added the government would pay the monthly insurance premium and gain benefits any time natural disasters destroyed people's assets.

"I expect the association to give us a fair scheme. They can charge administrative payments and monthly premiums to cover the people's participation in the insurance scheme," he said.

He added that he expected the premium to stay with the insurance company until it was necessarily disbursed for reconstruction.

"I will talk to House Commission VIII on social affairs in a bid to obtain its approval for the proposed association," he said.

Asked about the agency's recent hearing with the House commission, Syamsul said he was optimistic that the House would support the insurance scheme for residential areas since more than 120 million people and their assets had not been insured.