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Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

Natural Catastrophe Risk Data Acquisition, Analysis and Use: Indonesian Insurance Industry

Perspective

7th ICRM International SymposiumSingapore, 21st April 2016

Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

- “Pasar”consortium to build risk & loss profiles of wet market

- Copy of fire insurance policies and claims submitted to MoF to build database for tariff purposes

- Creation of National Insurance Data Centre (BPPDAN)

- Small reinsurance cession (US$500,000) of fire insurance ceded to build up national fire insurance database

- Creation of MAIPARK

- More serious reinsurance cession (15%) of earthquake insurance ceded to build up national earthquake insurance database

Good database is of prerequisite to make good

decision, good modeling

Tracing back efforts to build up good insurance database in Indonesia

1979/1980

1992

2004

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Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

- Good statistic from cessions for 37 years

- Able to set proper pricing based on good database of

4,500+ pasar

- Only covers small sector of property insurance

- Never materialized

- No business link to create financial burden in the occurrence of loss

- Statistic produced but believed only covers around 70%

- Has business link but cession too small to create serious financial burden in the occurrence of loss

- Based on market agreement only

Fire Ins Database by MoF

Learning and move on…

“Pasar” Consortium

BPPDAN

Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

MAIPARK: New Mindset & Approach on NatCat

- Indonesia lies on three major tectonic plates, ie Eurasia,Pacific and Indo-Australia.

- Last two decades: 20% earthquake events over 5.5 SR withTsunami potency occurred in Indonesia

• Establish business link to create financial burden

• Cession limit set high enough, in order that magnitude of financial burden in the occurrence of loss really hurts

• Based on supervisory authority’s regulation

• The only database to feed inventory module on CAT modeling with real values of building categories, construction class

• Aiming at geo-location based database7th

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Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

Journey towards Excellent Database

•

.

5

1 2 3 4 5 6 7 8Running No Main Policy Cover Original Policy No Endorsement No Endorsement Count Risk No Name of Insured QQ

1

2

16 17 18 19 20 21 22 23 24 25 26

Class of Construction Year Built Building Storey Inception/ Effective Expiry Curr. Building Machinery Stock Others Total

27 28 29 30 31 32 33 34 35 36Co Ins Status Co Ins Share Leader Policy No Policy Status First Loss MAIPARK share (SI) MAIPARK share Premium Gross Profit Wages Increase Cost

37 38 39 40 41 42 43 44Others Total Period of Indemnity Time Excess Prorate Days Adjustable Stock UW Year Remarks

9 10 11 12 13 14 15

Location of Risk City/ Kabupaten Kecamatan Kelurahan Postal Code Occupation Code Building Category

• Details of earthquake insurance cession based on standard formatted bordereau

• Bordereau template now consists of 44 column/fields• It took 5 years to get there from the initial 38 fields

Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

1. Some companies complained the EQ compulsorycessions and questioned the importance of nationaldatabase

2. Some ceding companies had problems in adjusting theirIT systems to meet standard formatted bordereaucessions

3. Inaccurate, incomplete data entry

4. Cession report flows like glue

Initial Challenges and Resistance

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Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

1. Creation of MRO and CRO

2. Creation of MTC (MAIPARK Training Centre)

3. Actively-Solutive Visits from MTC

4. Seminars, Workshops, Visits promoting the importance of excellent database

5. Enhancement of MAIPARK IT System

CEDING COMPANYMAIPARK MROCRO*

*CRO : Customer Relations Officers (MAIPARK)*MRO: MAIPARK Relations Officers (ceding)

S O L U T I O N S

Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

CEDING COMPANYMAIPARK

MRO

REINSURANCE

DEPT

CLAIMS DEPT.

FINANCE DEPT .

CRO*

CESSION DEPT.

CLAIMS DEPT.

FINANCE DEPT .

Functions of CRO and MRO

MAIPARK MROMRO

MRO

MRO

MRO

MRO

MROMRO

FUNCTIONS of CRO:1. Liaison Officer from MAIPARK2. Act as an organizators on cession matters

from MAIPARK on other divisions (finance, RDI, etc)

3. Proactively convey the problems or issues from MAIPARK side

4. Cooperate on other business opportunity

FUNCTIONS of MRO:1. Liaison Officer from ceding companies2. Act as an organizators on cession matters

from CEDING on other divisions (finance, claims, etc)

3. Proactively convey the problems or issues from CEDING side

4. Cooperate on other business opportunity

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Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

The Hazard Module

Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

Earthquake Catalogue (1599-2015)

Annually Update. Compiled from Engdahl and Villasenor (2002). Visser (1992). Newcomb and MacCan(1986), Rastori and Jaiswad(2006), Abe (1981, 1984), Abe and Naguchi (1983), Bath and Duda (1979), Geller and Kanamori (1977), Pachecho and Sykes (1992), Rothe (1969), Utsu (1979, 1982), Preliminary Determinataion of Epicenter of the US Earthquake Information Center (NEIC), Centroid-Momen Tensor (CMT) of Harvard University and Geophysical, Meteorological and Climate Agency (BMKG) of Indonesia.

• Data available but scattered• Some classified or of business interests• Got to know access

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Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

Yogyakarta EQ 2006

Merapi VE 2010Padang EQ 2009

Gorontalo survey 2008 Paleotsunami 2010

Research & on site Survey is of paramount importance !

Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

Jakarta Flood 2013

6 - 7 m

Innudation Data Aquitition dan Model Verification

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Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

Why on-site survey is very important?

Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

The Use

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Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

National insurance data of MAIPARK has been used to:

• Review Earthquake Zone of Indonesia (2008 & 2010)

• Build MAIPARK’s Earthquake Model (now 4th generation)

• Build Jakarta Flood Model (2014)

• Review earthquake insurance tariff by Otoritas JasaKeuangan, the Indonesian Financial Service Authority (2013)

Dr. Frans Y. Sahusilawane, MBA, ACII, AAIK,

President/CEO

7th IC

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