Aidi, Zil and Farida, Hasna (2020) Natural disaster insurance for Indonesia disaster management. Advances in Environmental Sciences, 12 (2). pp. 137-145. ISSN 2066-7647

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Abstract

Indonesia is a disaster-prone country because its territory is around the Pacific Ring of Fire.
The high intensity of the disasters is inversely proportional to the budget provided by the government for
disaster management. Based on these conditions, another funding procedure is needed to deal with
potential disasters, and insurance is one of the logical choices that can be taken. This research tries to
describe and analyze the prospects of natural disaster insurance implementation for Indonesia disaster
management and the natural disaster insurance practices in Japan and New Zealand as a comparison.
The result of this research found that the number of insurance users, including natural disaster insurance
in Indonesia, is only around 2% of the 265 million population of Indonesia as of the end of 2018. Two
things cause this condition; the first is the absence of regulations from the government that obligate
natural disaster insurance for people who live in the locations that are prone to disasters. The second
reason is the lack of literacy and public knowledge related to the benefits of participating in natural
disaster insurance. To overcome this, the government should ideally arrange regulations that can force
community participation in natural disaster insurance. After that, the government can choose whether to
manage the natural disaster insurance itself by creating a particular entity that is professional in
managing disasters like in New Zealand or initiate a partnership with private insurance companies.
Finally, the government of Indonesia in cooperation with the private sector, must intensify education
about the benefits of insurance to the public. This intensification aims to increase public literacy towards
insurance which will indirectly have an impact on the increasing number of people who have natural
disaster insurance. The increase in public literacy is expected to make the level of community
participation in natural disaster insurance to be better as has been achieved in Japan and New Zealand.
Key Words: Indonesia, natural disaster, disaster management, insurance.

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