Jakarta, Indonesia, 1 October 2013
– IFC, a member of the World Bank Group, signed a cooperation agreement
with PT Asuransi MAIPARK Indonesia, a specialist reinsurance company, to
develop a new insurance product to help protect banks that provide loans
to individuals and micro, small and medium enterprises from losses following
earthquakes and other disasters.
More than 12 million Indonesians live and work in earthquake-prone zones,
with economic exposure reaching an estimated $79 billion. These risks are
especially high in areas such as Yogyakarta and Padang, where the worst-hit
banks lose between 15 and 35 percent of income following recent earthquakes.
The losses erode the banks’ capital reserves and compromise their ability
With support from IFC, MAIPARK will work with local insurance companies
to develop and distribute a new earthquake-index insurance product. The
company will also be reaching out to commercial banks, regional banks,
and microfinance institutions, particularly those with a significant client
base in Indonesia’s earthquake-prone regions.
“Indonesia's earthquake hazard exposure is among the highest in the world,
both in terms of human mortality and economic losses,” said Frans Sahusilawane,
president director of MAIPARK. “Our cooperation with IFC allows us to
provide protection for banks against financial risk due to earthquakes.”
Insurance that hedges banks against losses from nonperforming loans and
mass savings withdrawals can improve their risk management of natural disasters.
This can in turn support better financial performance, lower interest rates,
reduce volatility in access to credit, and expand banking services.
“Insurance protection for banks that provide loans to small and medium
enterprises is important in maintaining business sustainability,” said
Sarvesh Suri, IFC’s country manager for Indonesia. “This is IFC’s first
insurance project in Indonesia and underlines our commitment to fully support
sustainable economic growth providing protection to all key players.”
The project is funded by the Japanese government, one of the key donors
of the Global Index Insurance Facility, a multidonor trust fund managed
by IFC and jointly implemented with the World Bank. Other donors include
the European Union and the Netherlands. The facility’s objective is to
expand the use of index insurance as a risk management tool in agriculture,
food security and disaster risk reduction.
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