The death toll from recent floods has topped 1,300, while 1.2 million people have been displaced in Indonesia alone. The insurance coverage gap is widening, as experts note that increasingly frequent extreme events threaten to make current models unsustainable. Insurance companies are preparing to exclude some natural risks, while most losses in developing countries remain uninsured.

Jakarta (AsiaNews) – The devastating floods that killed more than a thousand people in Southeast Asia in recent weeks have also highlighted the need for new insurance coverage models.

According to the Center for Economic and Law Studies (CELIOS), an Indonesian think tank, the estimated damage to the Indonesian economy alone will amount to US$ 4 billion, while some private Thai investment firms have estimated the economic damage in Thailand at between US$ 360 million and US$ 740 million, 16 of which in Hat Yai province alone, one of the hardest-hit areas.

Meanwhile, the death toll continues to climb. More than 1,300 people have reportedly died in Indonesia, Thailand, and Sri Lanka, with rescuers still searching for hundreds of missing people.

On the island of Sumatra in Indonesia alone, local authorities have revised the death toll, with 712 deaths and over 500 missing. Over 1.2 million Indonesians have been displaced. In Sri Lanka, the death toll last night stood at 465, while Thai authorities have reported 176 deaths.

The scale of claims has raised concerns across the region. As such events become more frequent and intense, insurance payouts are likely to increase, and insurance companies will likely revise their coverage to exclude certain natural hazards.

According to Kenrick Law, president of the Singapore Reinsurers' Association, interviewed by Nikkei Asia, after all claims for damages have been received, “The full extent of losses will likely reveal a protection gap, with many affected parties unable to file claims simply because they lack coverage.”

Some experts had highlighted this problem in the past. According to the World Bank, over 90 per cent of losses due to natural disasters in developing countries are uninsured, creating, according to other estimates, a gap of nearly US$ 2 trillion.

To overcome this, extreme weather events should first be considered "structural risk drivers”, according to Budi Herawan, president of the General Insurance Association of Indonesia (AAUI).

“The direction is to ensure that policies going forward reflect more refined risk segmentation, stronger disaster preparedness requirements for insureds, and continued collaboration with governments on risk mitigation and disaster financing frameworks,” he explained.

Indonesia was one of the countries hardest hit by the floods. The country’s disaster management authority reported that 2,400 homes were damaged in Aceh province, 3,000 were flooded in Padang Pariaman, West Sumatra, while nearly 2,000 were affected in North Sumatra, and 2,200 were threatened in Kebumen, Central Java.

Indonesian President Prabowo Subianto emphasised that such extreme events will become increasingly frequent due to climate change and has called on the Ministry of Finance to fill the gaps.

In recent days, insurance for state-owned properties was launched, a decision accompanied by a request to insurance companies to allow local authorities to participate in natural disaster insurance policies.

“By 2026, I will ask the Directorate General of State Assets to monitor all ministries and institutions as users of goods that must insure their state property,” explained Deputy Finance Minister Suahasil Nazara, who added that the total value of state-owned property in offices and education and healthcare sectors amounted to approximately 250 trillion rupiah, or US$ 15.2 billion.

Thailand has also asked insurance companies to maintain stable insurance premiums to support those affected by the recent floods.

According to Thailand’s Office of Insurance Commission (OIC), the industry regulator, at least 500 claims have been filed so far.

According to reports published by Thailand’s Department of Disaster Prevention and Mitigation, floods in the country have affected more than one million families (2.9 million people) in the south of the country alone, while 143,000 families, nearly 500,000 people, affected in the central and northern provinces, with damage to hundreds of thousands of properties.

In Vietnam, PVI Insurance, one of Vietnam’s largest insurance companies, told Nikkei Asia that as of the end of November, it had received 830 claims for motor vehicles alone.

“The number and scale of cases have both increased sharply, with the level of damage many times higher than normal,” Pham Anh Duc, PVI's general director, told Nikkei Asia. “PVI Insurance in particular and other insurance companies will conduct reviews and re-evaluations to potentially adjust the policies in areas with high risks of storms and floods.”

• asia
• south-east
• thailand
• indonesia
• vietnam
• singapore
• sri lanka
• flooding
• insurance
• coverage
• climate change