Global Index
Insurance Facility




                                                                                                INDONESIA
 BACKGROUND
 Around 133 million people in Indonesia live in or near high-risk earthquake zones, with economic exposure reaching an estimated
 US$79 billion. These risks are especially high in areas such as Yogyakarta and Padang, where the banks that were most affected
 lost between 15 and 35 percent of their income following recent earthquakes. These events can erode bank capital reserves and
 compromise their ability to lend.



 PROJECT DESCRIPTION
                                                                                                          PROJECT SNAPSHOT
 Supported by the Global Index Insurance Facility (GIIF), the International Finance
 Corporation (IFC) has been working with PT Reasuransi MAIPARK (national reinsurer             Market Launch 2016
 of all special risks) to design and retail an index insurance product that protects the
 lending portfolios of banks from liquidity crises in the aftermath of an earthquake. This     Clients           Microfinance institutions
                                                                                                                 (MFIs)
 is relevant particularly for microfinance institutions (MFIs) and rural banks to be able
 to continue lending to communities when funds are most needed.                                Partners          PT Reasuransi MAIPARK
                                                                                                                 (national reinsurer of all
                                                                                                                 special risks)
 RESULTS AND IMPACTS                                                                           Products          Earthquake index insurance
 A new earthquake index insurance (EQII) product has been approved by the                                        (EQII) product to cover the
 regulator in 2016, and is ready for the retail market. The insurance payout is                                  loan portfolio of financial
                                                                                                                 institutions
 triggered by a pre-determined earthquake parameter (Magnitude and Intensity),
 which is announced by an independent and established third party like the BMKG                Insured Assets    Portfolios of banks and MFIs
 (Indonesia’s Meteorological, Climatological, and Geophysical Agency) or the USGS
                                                                                               Insured Perils    Earthquakes
 (the United States Geological Survey).
                                                                                               Regulatory        Financial Services Authority
 The idea is for the MFIs to buy insurance to protect their loan portfolios from               Environment       of Indonesia (OJK)
 potential liquidity crises after earthquake events.
                                                                                               Data              PT Reasuransi MAIPARK for
                                                                                                                 EQ models; BMKG or USGS
 NEXT STEPS                                                                                                      for verification
 Sustained and creative market outreach; ensuring relevant product adjustments
 and pricing; and combining incentives with other products and financial instruments will all play a key role in achieving market scale and
 sustainability. IFC is working with MAIPARK to develop market awareness and educational materials, and will continue to reach out to
 financial institutions across Indonesia.




                                                   Global Index Insurance Facility is funded by
                                   PARTNER FOCUS

Partner Information                PT Reasuransi MAIPARK Indonesia is a special risk-insurance company owned
                                   by all licensed general insurance and reinsurance companies in Indonesia.
                                   It currently provides reinsurance coverage for earthquake, volcanic eruption,
                                   and tsunami risks.

Contact                            Utako Saoshiro | usaoshiro@ifc.org




About Global Index Insurance Facility
The Global Index Insurance Facility (GIIF) is a multi-donor trust fund that works to provide access to finance to smallholder
farmers, microentrepreneurs, and microfinance institutions. GIIF supports the development and growth of local markets for
indexed/catastrophic insurance in 31 developing countries, primarily in Sub-Saharan Africa, Latin America and the Caribbean,
and Asia Pacific. The facility is part of the World Bank Group’s Finance & Markets Global Practice.

For more information, please visit www.indexinsuranceforum.org.
Join us on LinkedIn: Global Index Insurance Forum Group.




                                  Global Index Insurance Facility is funded by                                                  2