A.     Socioeconomic outputs

Outputs focused on the substantial challenges of institutional development required for greater use of financial instruments to manage the financial consequences of natural hazards in Indonesia.

  1. He, Chusu and Hillier, John and Milne, Alistair K. L. and Park, Seyoung and Soetanto, Robby, “Using Insurance Instruments to Improve Disaster Risk Finance in Indonesia” (March 5, 2020). Available at SSRN: https://ssrn.com/abstract=3350194

This paper is an overview of how insurance instruments could be used in Indonesia to improve disaster risk finance (the arrangements for managing the financial consequences of disaster). We review the policy and research literature to describe the existing arrangements in Indonesia for preparing for and responding to disasters, including the efforts of an active Indonesian community mapping movement to fill in some of the major gaps in data that hinder the assessment of disaster risks. We argue that as a large geographically diverse middle-income country, Indonesia is well placed to employ insurance instruments for fairer and more predictable sharing of the financial burden of disasters. This could be through a combination of increased private insurance for households, firms and government agencies across the country and insurance-based arrangements for allocating government disaster relief funding and, when required for the largest high impact events, accessing international resources. This will, however, require careful implementation and a sustained effort to address gaps in data, skills and institutional capacity.

  1. R. Soetanto, F. Hermawan, A. Milne, J.U.D. Hatmoko, S. As’ad, C. He. “Developing Sustainable Arrangements for ‘Proactive’ Disaster Risk Financing in Java, Indonesia”, runner up for the award of the best paper prize at the International Conference on building resilient cities https://icbr09itb100.itb.ac.id/.  Forthcoming in the  International Journal of Disaster Resilience in the Built Environment https://www.emeraldgrouppublishing.com/ijdrbe.htm.

This paper draws on a series of stakeholder engagements in Solo and in Semarang, to assess the use of ex-ante financial instruments and to identify the barriers and challenges that limit adoption. It recommends a combination of ‘top-down’ and ‘bottom-up’ measures, addressing cultural and institutional as well as technical issues in disaster risk finance. The local governments heavily rely on contingency funding, which is not enough and often significantly delayed, to fund recovery and reconstruction of public infrastructure. The use of insurance is limited in both public and private sectors, particularly in the majority of low-income communities. Various barriers and challenges were identified under several categories, namely, institutional, cultural, affordability, lack of awareness and knowledge, insurance arrangement process and lack of trust. The findings also suggest that improving insurance education should involve multiple stakeholders, and both formal and informal.

  1. J.U.D. Hatmoko, R. Soetanto, F. Hermawan, A. Milne, C. He.  “A Survey Report on Flood Experience, Interest in and Willingness to Pay for Flood Insurance in Semarang, Central Java” Working Paper 2020

The objectives of this research are;

    1. Exploring the flood experience and its consequences for local government, community, and private sectors in Semarang
    2. Investigating the interest of local government, community, and private sectors in using insurance as a mechanism of protection of flood in Semarang
    3. Examining the willingness to pay for flood insurance in Semarang for local government, community, and private sectors.

This survey adopted purposive sampling method with respondents from local government, communities, and private business. A combination of methods were both face-to-face structured interview and self-administered questionnaires using online forms. The results show insurance has been taken to protect public assets of Local Government of Semarang since 2017. The majority (71.4%) of the low income community were not interested in the flood insurance, while 76.9% of those on adequate income were interested in the flood insurance. For the Private business, it was found that 55.6% of micro-small private sector are not interested in insurance, and 77.8% of middle-large private sector are interested in insurance. In terms of the willingness to pay, it was found that 40% of the community can’t afford to pay the insurance, while the various results were obtained for private businesses.

Working paper will be linked as a PDF to this page.

B.     Modelling and Data Outputs

Three more papers will be added here, with abstracts and links.