Liga Asuransi – Risk takers, how are you? May your family and business always be well.
We have started entering the election year when 2024 will be a moment of leadership change in Indonesia.
Elections, in addition to providing hope for progress but on the contrary can also be a disaster that causes political conflict that has an impact on economic destruction.
As a senior insurance broker, I want to focus on risk management and insurance in this blog. This time we will discuss the risks resulting from riots related to elections.
If you are interested in this article, please share it with your colleagues so they understand like you.
UNDERSTANDING OF RIOT AND CIVIL COMMOTION
Riots are events that can shake the life of a city. Amid the chaos and instability that ensued, not only can the community become victims, but also shops, restaurants, offices, hospitals, and other places of business. In this situation, business owners must understand the importance of risk management and insurance protection.
Risk management is not just a remote theoretical concept but an approach that must be taken seriously in running a business. The risk of unrest is a real threat to business continuity, and a company’s success often depends on its preparedness and ability to deal with it.
One of the essential steps in risk management is protecting business assets and investments through insurance.
Insurance is a tool that can provide financial protection when a business is affected by riots. In the context of riots, insurance coverage can help business owners deal with physical losses, loss of income, and operational disruption resulting from such events.
Not only that, but insurance can also help reduce the financial burden arising from damage or loss. By having the right insurance policy, business owners can feel more at ease and focus on recovering their business without having to be burdened with the cost of repairs or inventory replacements.
However, it is essential to remember that risk management and insurance are not the only solutions to cope with the impact of unrest. Prevention and recovery efforts are also an important part of a comprehensive strategy.
In the face of unrest, collaboration with authorities, participation in the city’s security programs, and building solid relationships with local communities are key factors in mitigating risks and restoring trust.
In this article, we will explore the impact of the riots that engulfed shops, restaurants, offices, hospitals, and other establishments within the city. In addition, we will also discuss the importance of risk management and insurance protection in the face of such riots. With a deep understanding of these two concepts, business owners can protect their investments, minimize losses, and accelerate business recovery under challenging times.
Let’s continue this discussion and understand how riots can affect businesses within cities and the importance of risk management and insurance in dealing with them.
THE SUFFERING OF RIOTS AND CIVIL COMMOTION VICTIM
To better understand the impact of riots, we illustrate the story of a riot or civil commotion.
A businessman named Budi owns a grocery store that he has painstakingly established in a peaceful town. The shop is his family’s primary source of livelihood and pride for Budi.
One day, the city is suddenly hit by an unexpected riot. The warring groups engaged in intense clashes, and the city’s atmosphere turned chaotic. Shops and businesses along the main road were targeted by violence and vandalism.
Budi, who never imagined that the riots would affect his business, was shocked and panicked. He saw that his grocery store was in a terrible state. Doors and windows were broken, and shelves, usually full of merchandise, were now smashed and empty. Valuable things were stolen, and almost all the store’s supplies were seriously damaged. All the hard work and investment Budi had devoted over the years was gone instantly.
Budi felt desperate and confused about his next move. How could he recover his business after such a heavy loss? He pondered several options, including borrowing money from his family or selling his assets to repair the shop. However, he realized that the loss he experienced had a material and an emotional impact that destroyed him.
WHAT CAUSED THE RIOTS?
The causes of riots and riots can vary, including in the context of electoral activities. Here are some of the factors that can cause unrest and riots related to elections:
- Political tensions
Elections are often moments that trigger high political tensions. Competition between political parties and candidates can evoke strong emotions among their supporters. Deep disputes, conflicts of interest, and political disagreements can create an environment prone to unrest.
- Public discontent
Public dissatisfaction with the government or political system can contribute to unrest. People who feel underrepresented or frustrated with government policies may express their discontent through protests, demonstrations, or violence.
- Provocation and destruction
In the context of elections, sometimes some parties deliberately provoke and take advantage of the situation to create riots. Provocative acts such as spreading fake news, burning buildings, or physical attacks can trigger chaos involving mobs.
- Intergroup conflict
Elections can also exacerbate pre-existing intergroup conflicts. Political, religious, ethnic, or ideological differences can be divisive and trigger escalating disputes. High intergroup tensions can trigger riots and riots.
WHAT ARE THE IMPACTS OF THE RIOTS?
The consequences of riots and riots related to electoral activities are as follows:
- Physical damage
Riot activities can cause physical damage to public and private buildings, infrastructure, and property. Shops, offices, and other public facilities can be vandalized, resulting in substantial material losses.
- Security intrusion
Riots and riots can create unsafe situations and disrupt public order. This can make people fear and worry for their safety and affect daily activities, such as mobility and access to essential businesses or services.
- Economic disruption
Unrest can hurt the local economy. Closing shops, restaurants, and other establishments can decrease revenues, job losses, and economic uncertainty. Unrest can dampen investor confidence, hinder economic growth, and disrupt investment in cities or regions.
RECORDS OF RIOTS AND RIOTS IN INDONESIA
Indonesia has experienced some significant riots and riots in its history. Here are some examples of famous riots and riots that have occurred in Indonesia:
- 1998 riots
The riots that occurred in 1998 were one of the most important events in modern Indonesian history.
Triggered by political and economic tensions, these riots occurred in various cities throughout Indonesia, including Jakarta, Solo, Medan, and others. These riots resulted in inter-ethnic violence, robberies, burning shops, and other acts of violence. These riots also triggered the fall of the New Order regime and the end of President Suharto’s rule.
- 1998–2001 Poso riots
This riot occurred between Muslim and Christian communities in Poso City, Central Sulawesi. This conflict began with social and political tensions and a series of attacks and reprisals that led to interreligious disputes. These riots resulted in thousands of casualties and heavy material losses.
- 1999-2002 Ambon riots
The riots in Ambon, Maluku, began with a dispute between Muslim and Christian groups. The conflict escalated into prolonged riots, damaged many buildings, and caused significant casualties. The Ambon riots also impacted riots in several cities in Maluku, such as Ternate and Halmahera.
- 2001 Sampit riots
This riot occurred in Sampit, Central Kalimantan, and involved a conflict between Dayak and Madurese. The conflict was triggered by disputes between the two groups, leading to inter-ethnic violence, house burnings, and mass killings. These riots left thousands injured and displaced, triggering widespread ethnic conflicts in several areas of Kalimantan.
- 2019 Wamena riots
The Wamena riots occurred in Wamena, Papua, in 2019. Violent incidents between indigenous Papuans and migrants outside the area triggered the unrest. These clashes resulted in property damage, mass displacement, and casualties.
HOW MUCH DID THE RIOTS AND RIOTS COST?
The estimated value of losses suffered by shop owners or business owners due to riots may vary depending on the scale of the riot, location, type of business, and other factors. It is difficult to give an exact figure because each riot situation has different characteristics.
However, here are general estimates of the value of possible losses:
- Loss per store/place of business
Physical damage to stores or businesses, such as building destruction, theft, or inventory damage, can cause significant losses. The loss can include repair or renovation costs, replacement of damaged or stolen items, and loss of revenue during recovery time. This amount can vary from several million to tens of millions of dollars, depending on the size and type of business.
- Overall losses on the scale of the riots
When riots engulf a city or area at large, the losses suffered by shopkeepers and businesses can be substantial. This includes failures to hundreds or even thousands of affected stores and businesses. In severe cases, losses can run into billions of dollars or more.
It is important to note that these figures are only estimates and are subject to change depending on the specific situation and conditions during the riots. Also, business owners must have adequate insurance and follow proper insurance claim procedures to obtain compensation appropriate for losses experienced.
CAN AN INSURANCE POLICY COVER THE RISK OF RIOTS?
Yes, sure. Insurance coverage is the best solution that every business owner can prepare. With insurance coverage, they can be reimbursed for rebuilding their business.
The risk of riots and riots can be covered by insurance, especially through insurance policies that cover the risk of riots or the expansion of property insurance risks that cover damage due to riots.
However, insurance coverage does not apply automatically in every insurance policy. It should be noted that insurance coverage for riots may vary between insurance companies and the type of policy owned.
Some things to note regarding riot insurance are:
- Read the insurance policy carefully.
It is essential to read and understand the terms and conditions of the insurance policy carefully. Be sure to find out if rioting is included in your insurance coverage.
- Riot-specific guarantees
Some insurance companies offer policies that cover the risk of riots and riots. This policy can protect against physical damage to property, inventory, and other business assets caused by riots.
- Additional rider insurance
Sometimes, you may need to add riders or endorsements to your property insurance policy to cover the risk of riots. This may be an option if your policy’s basic coverage does not cover riots.
- Limitations and exclusions
Every insurance policy usually has certain limitations and exclusions. For example, there are limits on the maximum number of claims that can be brought or exclusions for damages caused by certain acts or omissions. Understanding such limitations and exclusions is essential before purchasing an insurance policy.
- Impact on premiums
Having riot insurance coverage can affect your insurance premiums. Policies with wider coverage and higher protection may have higher premiums as well. Check with your insurance company for information on exact premiums and coverage.
Before purchasing an insurance policy, it is advisable to speak with an insurance broker to get a detailed description of the riot insurance coverage available and ensure that your business needs and risks are well covered.
WHY DO BUSINESS OWNERS NEED TO USE THE SERVICES OF AN INSURANCE BROKERAGE COMPANY?
Insurance brokers are different from insurance agents. Insurance agents may only represent one insurance company, and agents are not responsible for assisting their clients in the event of a claim.
Business owners should use the services of an insurance brokerage company because several benefits can be obtained through their services. Here are some reasons why business owners should use the services of an insurance brokerage company:
- Access to a wide range of insurance options
Insurance brokerage companies have access to various insurance companies and different insurance products. They can assist business owners in finding insurance options that suit their business needs and risks. Business owners can compare and choose the most suitable insurance policy with optimal prices and coverage by having various options.
- Extensive knowledge and experience
Insurance brokerage companies have deep knowledge and experience in the insurance industry. They understand the different types of business risks and the associated insurance requirements. With their knowledge and experience, insurance brokers can assist business owners in analyzing risk, evaluating insurance needs, and finding the best solution.
- Better negotiation and price quote
Insurance brokers can negotiate with insurance companies to get better quotes for business owners. With their knowledge of the insurance market and the relationships established with insurance companies, brokers can assist business owners in obtaining more competitive premium rates and optimal protection.
- Preparation of appropriate policies
Insurance brokers can assist business owners in drafting an insurance policy that suits the specific needs of their business. They can advise on the right coverage, tailor the policy to the risks faced, and optimize insurance coverage according to the available budget.
- Effective claims management
When an insurance claim occurs, an insurance broker can assist business owners in the claim process and adequate settlement. They can provide guidance and support in filing claims, bridge communication between business owners and insurance companies, and ensure claims are handled quickly and fairly.
By using the services of an insurance brokerage company, business owners can leverage the knowledge, experience, and network of brokerage companies to ensure that their business is well protected from risk and gets insurance protection that suits their needs.
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