Indonesia to establish disaster insurance scheme

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Disaster insurance is ‘clearly a very relevant issue for Indonesia’ because post-disaster management is a lot more costly than disaster prevention, said a World Bank economist at an event in Jakarta last Thursday. The disasters that hit Japan on the 11th March have prompted Indonesia to set up an integrated disaster prevention system, part of which will include disaster insurance arrangements.

Indonesia is another country which has been shocked by the magnitude of the events in Japan and is now seeking ways to mitigate the risks of a major disaster striking their country.

Schemes for disaster insurance have been under assessment by organisations in Indonesia since last year, once the assessment has been concluded the proposals will be submitted to the Indonesian House of Representatives for approval.

This article cites the Caribbean Catastrophe Risk Insurance Facility as an example of a scheme which could be an appropriate model for Indonesia.

Risk transfer tools such as catastrophe bonds could also be proposed as potential methods through which Indonesia can mitigate some its natural disaster risks.

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