Indonesia’s Experience in Designing and Implementing a Public Assets Insurance Program

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The Public Asset Insurance Program (ABMN) aims to insure public assets against disasters, established under Minister of Finance Regulation No. 97/PMK.06/2019, as part of Indonesia's Disaster Risk Financing and Insurance (DRFI) strategy [15][49] - The report outlines nine key lessons learned from the implementation of the ABMN program, emphasizing the importance of stakeholder engagement, data management, and adaptability [16][20] Summary by Sections Objective - The ABMN program was launched in 2019 to provide insights on stakeholder management and tackle financial and technical challenges, with three main objectives: informing government officials, supporting DRFI implementation, and global knowledge-sharing [29][31] Introduction - Indonesia faces frequent natural disasters due to its geographic location, with an average of 289 disasters per year over the past 30 years, leading to significant human and economic impacts [34][36] Key Findings - Developing a clear value proposition for risk financing products is essential for program adoption [17] - Regulatory frameworks must be carefully considered to minimize resistance and ensure stakeholder engagement [18] - A staged implementation approach allows for early course correction and minimizes risks [18] - Accurate data management is crucial for informed decision-making [19] - Close collaboration with stakeholders fosters a sustainable system for protecting public assets [19] - Continuous training and knowledge-sharing enhance program effectiveness [20] - A comprehensive strategy combining awareness campaigns and targeted capacity-building is vital for stakeholder engagement [20] - The program's adaptability during unforeseen circumstances, such as the COVID-19 pandemic, demonstrates its resilience [20] Government Actions - The GoI should clearly define and communicate the benefits of risk mitigation products, involve stakeholders, and develop regulations considering existing frameworks [22] - Valid and complete data collection is necessary for informed program design decisions [22] - Robust governance through monitoring and evaluation processes is essential [22] - Establishing long-term partnerships with key stakeholders ensures program viability [22] - A multifaceted capacity development approach tailored to stakeholder needs is crucial [22] Program Implementation - The ABMN program began with a pilot project in 2019, insuring 1,337 facilities for a total value of IDR 10.73 trillion (US$ 688 million) [58] - By 2023, the number of insured properties increased to 10,920, with a total insured value of IDR 72.64 trillion (US$ 4.6 billion) [58] - The program's insurance policy covers various risks, including natural disasters and terrorism, and is managed directly between the MoF and participating insurance companies [67] Financial Protection Gap - The average annual direct economic costs of disasters are IDR 22.8 trillion (US$ 1.46 billion), while the available disaster reserve fund is only IDR 3.1 billion (US$ 198 million), highlighting a significant financial protection gap [41]