Insurance Firms Set Up Arbitration Body

Indonesian insurance companies inaugurated Friday an arbitration body to settle disputes with policy-holders and bypass the country's slow and questionable legal system.

The Indonesian Insurance Mediation Body (BMAI) set up by the federation of the associations of life and general insurance companies will begin operations next week.

"The BMAI is a kind of arbitration body for handling insurance-related disputes, which is established as a reaction to unsatisfactory legal verdicts that usually place companies at the losing end," said the chairman of the newly established body, Arizal ER. "The decisions made by the body will be legally binding," he said.

To give the best services, Arizal said he had consulted with insurance mediation bodies in Malaysia and Thailand and conducted numerous studies with them.

"In terms of services, we are prepared with the best standard operating produces, skilled professionals and a high standard of information technology," he said.

One of the services provided by the body is a 24-hour customer complaints procedure, which can be made through the Internet.

"In the past, there were many insurance claim disputes that were not handled properly. I hope that the BMAI can provide fair settlements to claims disputes and give more security to all stakeholders in the insurance industry," Capital Market Supervisory Agency (Bapepam) chairman Fuad Rachmani said.

Faud officially launched the body on the behalf of the government.

He said the country's legal system had not provided fair verdicts in claim disputes.

"Our judicial system has been very weak. People tend to feel unsafe starting up a business. They are scared because everything is unclear and this could cause them huge losses later on," Fuad said.

Indonesian Insurance Association chairman Ahmad Subianto said the establishment of the body was a milestone for the industry in Indonesia.

"Insurance disputes must be settled under the customs of the insurance industry," he said.

Customer trust drove the industry and although the body was funded by insurance companies, Fuad said would be independent, just and fair.

A monitoring body, the supervisory board of the arbitration body (BPBMAI) has also been established, headed by five association officials and four academics.

"The (BMAI) has to be monitored so that it will not be conterproductive to the growth of the industry," BPBMAI chairman Isa Rachmatarwata said.

Isa said his team of nine would not "interfere" with cases being handled by the body. However, it would ensure all activities were carried out under standard operating procedures, he said.