News Non-Life30 Jul 2018

Indonesia:Move postponed to make local insurance mandatory for coal export shipments

30 Jul 2018

The trade ministry has decided to postpone for six months the application of rules requiring coal and crude palm oil export shipments to use Indonesian insurance, reports Reuters citing ministry officials.

The insurance rules would be postponed to 1 February 2019 Trade, Ministry spokeswoman Fajarini Puntodewi told Reuters by text message.

Indonesia is the world’s biggest exporter of thermal coal and palm oil.

The decision is the second time the rules, issued in October 2017 and due to come into effect on 1 August, have been postponed.

The rules were part of trade regulations that were intended to boost the role of the archipelago’s shipping industry and save foreign currency, part of which were postponed to 2020.

Export transport activities are still dominated by foreign insurance companies because trading system uses the free on board (FOB) mode. Under this, obligations, costs, transportation and risk of delivery of goods are borne by the overseas buyer who decides the insurance and insurer.

Mr Dody Dalimunthe, executive director of the General Insurance Association of Indonesia (AAUI), said there are 73 Indonesian insurance firms that cover coal and CPO shipping. “And many companies already use this insurance,” he said.

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