2. Copy right of MAIPARK 20051 Global Conference on Insurance and Reinsurance for Natural Catastrophe Risk: Istanbul, December 8 th - 9 th, 2005 Natural Catastrophe Risk Management Policy in Indonesia Presented by Werner Bugl, President Director PT. Asuransi MAIPARK Indonesia

3. Copy right of MAIPARK 20052 CONTENTS  Potential Catastrophe Risks in Indonesia: Earthquake, Tsunami & Volcanic Eruption  Role of the Government & Insurance Industry in Dealing with Catastrophe Risks: Establishment of Special Risks Insurance Company, PT. Asuransi MAIPARK Indonesia (MAIPARK)  Funding of MAIPARK  Indonesian Standard Earthquake Insurance Policy: Scope of Cover, Tariff  Market Penetration of Catastrophe Risk Insurance  Future Challenges  New Initiatives

4. Copy right of MAIPARK 20053 Catastrophe Risks in Indonesia  Devastating Earthquake and Tsunami in Aceh in December 2004 killed 170.000 and displaced 550.000 people  Earthquake in Nias in March 2005 killed 1,300 people and displaced 22,000  3 rd Strongest Earthquake Since Beginning of Instrumental Records  Largest Tsunami in Documented History in Terms of Casualties

5. Copy right of MAIPARK 20054 One of the World’s Most Seismically Active Regions Where to put your foot ? Not a place for the faint – hearted.

6. Copy right of MAIPARK 20055 Earthquake Record Subsequent to 26.12.2004 Since 26.12.2004 : 3,500 Recorded Earthquakes 183 Earthquakes > IV Richter Scale

7. Copy right of MAIPARK 20056 Home of 13% of World’s Active Volcanoes  Indonesia is a country with more than 122 active volcanoes  Eighty of these 122 active volcanoes have been classified “A” type according to their recorded eruption since year 1600 One of the most beautiful regions in the world One of the most complex geological settings too

8. Copy right of MAIPARK 20057 Indonesian Volcanoes RegionType AType BType CTotal Sumatra12 630 Java219535 Bali2002 Nusa Tenggara2000 Sulawesi112518 Maluku5308 Banda Sea9009 Total802616122 Beauty comes at a price

9. Copy right of MAIPARK 20058 Role of Government & Industry  Establishment of a National Earthquake Pool in 2003 which became PT. Asuransi MAIPARK Indonesia (MAIPARK) as from 23 rd December 2003  All Non-Life Insurance and Reinsurance Companies operating in Indonesia are shareholders of the company; MAIPARK is owned by the Insurance Industry itself  Promote discipline and proper handling of Earthquake Insurance  Set a benchmark for Earthquake Insurance Pricing  Collate national Statistics and Data Bases  Build strong local Capacity for Earthquake  Shareholders must cede a “Shareholder Cession” of each earthquake risk underwritten to MAIPARK. At present they cede 5% to 25% of sum insured with a max. of USD 2,500,000 any one risk to MAIPARK depending on the location of the risks

10. Copy right of MAIPARK 20059 Funding of MAIPARK  Registered Share Capital is IDR 50 billion  Paid-up Capital is some IDR 45 billion received from 91 Non-Life Insurance and Reinsurance Companies i.e. shareholders  Shareholding of each company is determined by the Directorate of Insurance, Ministry of Finance by a fixed percentage of Investment Funds of each company as of 31.12. 2002

11. Copy right of MAIPARK 200510 Indonesian Standard Earthquake Insurance Policy: Scope of Cover  The Indonesian Standard Earthquake Insurance Policy covers property loss or damage and business interruption as a consequence of earthquake shock, fire following earthquake, volcanic eruption and tsunami  Insurance Companies must issue a separate Earthquake Policy in addition to the Fire Insurance Policy

12. Copy right of MAIPARK 200511 Earthquake Tariff  The Indonesian Insurance Association has released a “Reference Earthquake Insurance Tariff”  Rate ranges between 0.104% to a maximum of 0.33% of the sum insured  Rate is priced depending on risk Zone / Location, Type of Occupation and Building Constructions  At present the average rate is approx. 0.12%

13. Copy right of MAIPARK 200512 Premium Computation  Premium rate for first loss policies is subject to short period premium scale of tariff  Premium is on annual basis or 12 calendar months. If period of cover is less than 12 months, premium is computed by using short-period premium scale

14. Copy right of MAIPARK 200513 Market Penetration of Catastrophe Insurance  Non-Life Insurance penetration rate in general is very low, despite growing from 0.69% in 2004 to 0.72% (Gross Premium in % of GDP) in 2004.  Increasing awareness for Catastrophe Cover after the Aceh Tsunami and Nias Earthquake. However, demand remains on the low side.

15. Copy right of MAIPARK 200514 Future Challenges  Gradual increase of “Shareholders Cession” to MAIPARK  More Insurance Education of the Society is needed

16. Copy right of MAIPARK 200515 Future Challenges (continued)  Implementation of Building Code to improve Vulnerability of Building Stock and Insurance Underwriting Practices  Establishment of the Natural Disaster Law

17. Copy right of MAIPARK 200516 New Initiatives  Residential Earthquake Insurance Scheme  Insurance / Reinsurance of Donor Funds for the Rehabilitation and Reconstruction of Aceh and Nias  Urgent Installation of Tsunami Early Warning System  Flood Risks & Terrorism Cover to be administered by MAIPARK in the coming years

18. Copy right of MAIPARK 200517 New Initiatives (continued)  Voluntarily Earthquake Risk Cession to MAIPARK in addition to the “Shareholders Cession”  Study on Sub-Soil Conditions

19. Copy right of MAIPARK 200518 Thank you Terima kasih