News Non-Life31 Oct 2018

Indonesia:State insurer to pay passenger liability compensation for Lion Air crash victims

31 Oct 2018

State-owned insurer PT Jasa Raharja (Persero) has estimated that it would have to pay compensation totalling IDR8.9bn ($585,200) to beneficiaries of victims of Monday's Lion Air plane crash.

The Boeing 737 plane crashed around the waters of Tanjung Karawang in West Java. It departed from Jakarta at 6:20 a.m. on the way to Pangkal Pinang which is the capital of the Indonesian province of Bangka Belitung Islands east of Sumatra. A total of 181 passengers and eight crew members died in the crash which took place 13 minutes after takeoff.

Jasa Raharja's managing director Budi Rahardjo said in a statement that the beneficiaries of all aircraft passengers are guaranteed compensation from the insurer that would be around IDR50m per victim, reports Bisnis.

The compensation will be paid from Jasa Raharja's compulsory contribution pool (IWJR). Since 2001, airplane passengers have been charged a fee of IDR5,000 per person for each airline ticket bought. Jasa Raharja was formed to assist victims of land, sea and air transportation accidents. It manages the Passenger Accident Liability Obligation Fund and Road Traffic Accident Fund.

However, compensation will not only be paid by Jasa Raharja. Airlines, in this case Lion Air, are also required to provide compensation in accident cases.

Indonesia also has a Minister of Transportation Regulation concerning the Responsibility of Carriers to Air Transport. The regulation stipulates that the amount of compensation for passengers who die as a result of aircraft accidents is IDR1.25bn per person.

Indonesia has ratified too the Montreal Convention 1999 under which airlines must provide compensation to passengers or families of passengers amounting to 113,100 special drawing rights (SDR) or around IDR2.03bn for each victim for injuries or death.

Meanwhile, PT Asuransi Simas Net is cross-checking the data of those it had insured on the Lion Air flight. Lion Air in cooperation with the insurer offers Lion Air Travel Insurance which covers personal accident, compensation for flight delays, damage or loss of baggage, etc. Not all passengers on board the flight were insured by the company.

The official China News Service says a Chinese company, China Minsheng Investment Group Leasing Holdings, owns the Lion Air plane that crashed. The leasing company said that it is fully covered by insurance.

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