INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY NOVEMBER 2024 ACKNOWLEDGMENTS This report was prepared by the World Bank. The team consisted of Dara Lengkong, Sumati Rajput, Fajar Pane, Cynthia Clarita Kusharto, Francesco Strobbe, Greg Fowler, Simon Sherriff, Djoko Trenggono, Frans Wiyono, and Elisabeth D. Nurani from the World Bank Group. The report was prepared under the overall guidance of Ilias Skamnelos, Practice Manager, Finance, Competitiveness and Innovation (FCI) Global Practice, EEAP2 Region, and Emiko Todoroki, Acting Practice Manager, Finance, Competitiveness and Innovation (FCI) Global Practice, EFNRF at the World Bank. The team gratefully acknowledges the support of the Directorate General of State Assets Management (Direktorat Jenderal Kekayaan Negara, DJKN) team, especially Rionald Silaban, Encep Sudarwan, Idris Aswin, Alm. Hamim Mustofa, Fatchur Berlianto, Yudi Santoso, David Sukma Putra, Arya Pratama, Doni Prasetyo Aji, Ery Kurniawan, and Apriliyati Eka Subekti, in the preparation of this report. The team would like to thank the resource persons representing the following organizations the Directorate General of State Assets Management (DJKN), Directorate General of Treasury (DJP), Fiscal Policy Agency (BKF), Attorney General’s Office, Financial Services Authority (OJK), Insurance Consortium for Public Asset (KABMN), General Insurance Association of Indonesia (AAUI), and Reasuransi Maipark Indonesia. The team also wishes to acknowledge the support provided by Peter Kjaer Milne together with peer reviewers for the report, Tatiana Skalon (Senior Financial Sector Specialist, EFNRF) and Jack Campbell (Senior Disaster Risk Management Specialist, ILCUR). Financial support for this report was provided by the Southeast Asia Disaster Risk Insurance Facility (SEADRIF) and the Global Shield Financing Facility (GSFF). INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 1 TABLE OF CONTENTS Acknowledgments..................................................................................................................................................................1 Table of Contents....................................................................................................................................................................2 List of Figures...........................................................................................................................................................................3 List of Boxes..............................................................................................................................................................................3 Executive Summary................................................................................................................................................................4 Abbreviations and Acronyms.............................................................................................................................................6 Objective....................................................................................................................................................................................8 Introduction..............................................................................................................................................................................9 How does the ABMN program work.............................................................................................................................13 Timeline....................................................................................................................................................................................17 Lesson #1: Where did it all begin? Developing a strong value proposition..................................................19 Lesson #2: Establishing a fit-for-purpose regulatory framework.......................................................................22 Lesson #3: Harmonizing with Government Administration Requirements....................................................27 Lesson #4: Deciding on a realistic approach (Taking a staged approach to implementation)...............32 Lesson #5: The importance of data accuracy and availability.............................................................................36 Lesson #6: Partnering with the private sector...........................................................................................................41 Lesson #7: The importance of enhancing the capacity and capability of public officials........................45 Lesson #8: Promoting the program (line ministry buy-in and participation)................................................48 Lesson #9: Flexibility and Adaptability (The Covid-19 Experience)...................................................................51 Annex 1: E-Learning.............................................................................................................................................................54 Annex 2: Stress test exercise.............................................................................................................................................55 References...............................................................................................................................................................................56 INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 2 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY LIST OF FIGURES Figure 1: Disaster Infographic as of December 31, 2023......................................................................................9 Figure 2: World Risk Index 2023.................................................................................................................................. 10 Figure 3: Financing Gap.................................................................................................................................................. 11 Figure 4: The DRFI Strategy........................................................................................................................................... 12 Figure 5: Realization of the BMN Program for Fiscal Years 2019–23............................................................ 13 Figure 6: Comparison between ABMN with Insurance Property for Fiscal Year 2019-23..................... 14 Figure 7: ABMN Program Stakeholder Structure.................................................................................................. 14 Figure 8: The Flow of ABMN Planning Process..................................................................................................... 28 Figure 9: The Flow of BMN Insurance Budgeting and Procurement Process............................................ 28 Figure 10: Staged Implementation of the ABMN Program.............................................................................. 33 LIST OF BOXES Box 1: The Initial Study of BMN and PFB Insurance............................................................................................ 26 Box 2: A Story of Perseverance and Progress........................................................................................................ 34 Box 3: Updating the SIMAN Application................................................................................................................. 39 Box 4: A Case Study from the 2021 Mamuju Earthquake in West Sulawesi.............................................. 44 Box 5: World Bank’s Technical Assistance for the ABMN Program............................................................... 47 Box 6: The Way Forward................................................................................................................................................. 53 INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 3 EXECUTIVE SUMMARY The Public Asset Insurance Program (Program Asuransi Barang Milik Negara, ABMN) is an initiative of the Government of Indonesia (GoI) to insure public assets against disasters. This program was established by Minister of Finance Regulation (PMK) No. 97/PMK.06/2019 and aims to provide financial protection for government buildings and infrastructure in the event of disasters. The program is part of the country’s Disaster Risk Financing and Insurance (DRFI) strategy, which aims to proactively manage disaster risks by ensuring financial preparedness. This report outlines nine key lessons learned from the implementation of the ABMN in the case of Indonesia. Each of the results of the success of the ABMN program in Indonesia is explained below. Key Findings: • Value Proposition: Developing and communicating a clear understanding of the benefits of risk financing products is essential for program adoption. • Regulation Development: The development of program-specific regulations must be carefully considered, taking into account constraints, communication, and comparison to minimize resistance to existing frameworks and stakeholder input. • Harmonization: The program’s success in prioritizing regulatory compliance, stakeholder engagement and ongoing evaluation provides valuable lessons in harmonization for designing similar insurance initiatives. • Staged Implementation: A staged rollout allows for early course correction and minimizes risk in new insurance environments. • Data Management: Establishing a robust data management system with accurate and complete information is essential for informed decision-making. • Stakeholder Engagement: Close collaboration with internal and external stakeholders, including the regulator and the insurance industry, fosters a sustainable system for protecting public assets and is critical for smooth program implementation. • Capacity Building: Continuous training and knowledge-sharing are essential for program effectiveness. • Multifaceted Approach: A comprehensive strategy that combines awareness campaigns with targeted capacity-building programs is crucial for stakeholder engagement. • Adaptability: The program’s ability to adapt to unforeseen circumstances, such as the COVID-19 pandemic, illustrates its resilience. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 4 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Government of Indonesia (GoI) Actions: By taking the following key actions, the valuable insights gained from these lessons can be applied to the design, development, and implementation of successful public asset insurance programs, ultimately mitigating challenges, and enhancing opportunities: • Clearly define and socialize the benefits of risk mitigation products early; • Involve stakeholders and research, and learn from international best practices; • Take into account existing policy frameworks and administrative standards when developing regulations; • Define, collect, and analyze valid, complete, and accurate data to support informed program design decisions; • Implement robust governance through monitoring and evaluation processes; • Avoid trying to do too much, too soon, and instead take a staged approach toward implementation so that any valuable lessons can be learned before expanding the program; • Establish long-term partnerships with key stakeholders, including the insurance industry, to ensure program viability and sustainability; • Develop a multifaceted capacity development approach through training and education programs tailored to stakeholder needs; and • Implement strategies to ensure program adaptability in the face of unforeseen challenges. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 5 ABBREVIATIONS AND ACRONYMS AAMAI Asosiasi Ahli Manajemen Asuransi Indonesia - Association of Indonesian Insurance Management Experts AASI Asosiasi Asuransi Syariah Indonesia - Sharia Insurance Association AAUI Asosiasi Asuransi Umum Indonesia - General Insurance Association of Indonesia ABMN Asuransi Barang Milik Negara - Public State Insurance Program APBN Anggaran Pendapatan dan Belanja Negara - State Budget APIP Aparat Pengawasan Internal Pemerintah - Government Internal Oversight ATR/ BPN Kementerian Agraria dan Tata Ruang/ Badan Pertanahan Nasional - Ministry of Agrarian Affairs and Spatial Planning/ National Land Agencies BKF Badan Kebijakan Fiskal - Fiscal Policy Agency BMD Barang Milik Daerah - Regional Public Assets BMN Barang Milik Negara - National State Assets BPDLH Badan Pengelola Dana Lingkungan Hidup - Environmental Fund Management Agency BPK Badan Pemeriksa Keuangan - State Audit Agency BPKP Badan Pengawasan Keuangan dan Pembangunan - National Government Internal Auditor BPOM Badan Pengawas Obat dan Makanan - Food and Drug Authority BNPB Badan Nasional Penanggulangan Bencana - National Agency for Disaster Management BPPK Badan Pendidikan dan Pelatihan Keuangan - Financial Education and Training Agency DG Direktur Jenderal - Director General DIBI Data Informasi Bencana Indonesia - Indonesian Disaster Information Data DJA Direktorat Jenderal Anggaran - Directorate General of Budget DJKN Direktorat Jenderal Kekayaan Negara - Directorate General State Assets Management DPD Dewan Perwakilan Daerah - Regional Representatives Assembly DRFI Strategi Pembiayaan dan Asuransi Risiko Bencana - Disaster Risk Financing and Insurance GoI Pemerintah Indonesia - Government of Indonesia IDR Rupiah Indonesia - Indonesian Rupiah IRBI Indeks Risiko Bencana Indonesia - Indonesian Disaster Risk Index KABMN Konsorsium Asuransi Barang Milik Negara - Insurance Consortium for Public Asset KEM-PPKF Kerangka Ekonomi Makro dan Pokok-pokok Kebijakan Fiskal - Macro-Economic Frame- work and Key Principles of Fiscal Policy INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 6 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY KMK Keputusan Menteri Keuangan - Minister of Finance Decree KNPK PUS$iklat Kekayaan Negara dan Perimbangan Keuangan - Training Center State Assets and Fiscal Balance KPPU Komisi Pengawas Persaingan Usaha - Indonesia Competition Commission KPKNL Kantor Pelayanan Kekayaan Negara dan Lelang - State Assets and Auction Service Of- fice LKPP Lembaga Kebijakan Pengadaan Barang/ Jasa Pemerintah - National Public Procure- ment Agency MoF Kementerian Keuangan - Ministry of Finance NUP Nomor Urut Pendaftaran - Registration Number OJK Otoritas Jasa Keuangan - Financial Services Authority Perpres Peraturan Presiden - Presidential Regulation PIC Penanggung jawab - Person in Charge PKKN Direktorat Perumusan Kebijakan Kekayaan Negara - Directorate of Formulation of State Assets Policy PKN-STAN Politeknik Keuangan Negara Sekolah Tinggi Akuntansi Negara - Polytechnic of State Finance PKNSI Direktorat Pengelolaan Kekayaan Negara dan Sistem Informasi - Directorate of State Asset Management and Information System PKU Pembatasan Kegiatan Usaha - Restricted Business Activity PMK Peraturan Menteri Keuangan - Minister of Finance Regulation POJK Peraturan Otoritas Jasa Keuangan - Financial Services Authority Regulation PP Peraturan Pemerintah - Government Regulation PPKM Pemberlakuan Pembatasan Kegiatan Masyarakat - Community Activity Restrictions En- forcement PPKN Perumusan Kebijakan Kekayaan Negara - Formulation of State Assets Policy SIMAN Sistem Informasi Manajemen Aset Negara - State Management Asset Information Sys- tem SIP Sistem Informasi Penilaian - Assessment Information System SIPKN Sistem Informasi Peta Kekayaan Negara - State Property Map Information System UAPB Unit Akuntansi Pengguna Barang - Goods User Accounting Unit UU Undang-Undang - National Law Point of note: 1 US$ = IDR 15,583 as of Oct 16, 2024 INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 7 OBJECTIVE The Government of Indonesia (GoI) launched its Public State Insurance Program (Asuransi Barang Milik Negara, ABMN) in 2019. Since then, the still ongoing development of the program has provided valuable insights, including on stakeholder management, and how to tackle various financial and technical challenges, helping it to capitalize on the opportunities that have contributed to its success to date. This document presented the implementation of the ABMN program beginning with pilot activities in 2019 through December 31, 2023. This document has three objectives: 1. Informing the GoI: To prepare government officials with the relevant knowledge to guide future decisions and strategies for the ABMN program (including potential expansion to other line ministries and also the subnational- level governments). 2. Supporting DRFI implementation: To provide valuable information for government officials tasked with implementing other aspects of Disaster Risk Financing and Insurance (DRFI), specifically the Pooling Fund Bencana (PFB).1 3. Global knowledge-sharing: To act as a reference for officials in other countries in the process of designing, undertaking, or maintaining public asset insurance programs. 1 The Pooling Fund Bencana (PFB) is a system for collecting and managing money to fund disaster response specifically. See Timeline for details. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 8 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY INTRODUCTION Indonesia is a sprawling archipelagic nation that lives under the constant threat of natural disasters. Its geographic location on the Pacific Ring of Fire exposes it to frequent earthquakes, tsunamis, and volcanic eruptions. Coupled with seasonal monsoons, the country experiences frequent floods, landslides, droughts, and forest fires. Figure 1 illustrates the impacts of earthquakes, volcanic eruptions, floods, droughts, and landslides in Indonesia. Figure 1: Disaster Infographic as of December 31, 2023 INDONESIA DISASTERS 2023 As of 31 December 2023, the number of disasters recorded was 5,400. The dominant natural disasters were forest and land fires, extreme weather, and floods. Natural disasters resulted in 275 fatalities, 33 missing, 5,795 injured and 8,491,288 affected and displaced Distribution of Natural Disasters TOTAL DISASTERS NUMBER OF INCIDENTS PER TYPE OF DISASTER IN 2023 Period 1 January - 31 December 2023 YEAR 2023 UPdate 26 January 2024 NATURAL DISASTERS EARTHQUAKES VOLCANIC ERUPTIONS FOREST FIRES EXTREME WEATHER FLOODS LANDSLIDES DROUGHTS TIDAL WAVES & ABRASION IMPACT OF NATURAL DISASTER DAMAGE IN 2023 IMPACT OF NATURAL DISASTERS PERIOD 1 JANUARY - 31 DECEMBER 2023 DAMAGED DAMAGED HOUSES OFFICES & BRIDGES DECEASED SUFFERING & SEVERELY DAMAGED HOUSES MODERATELY DAMAGED HOUSES LIGHTLY DAMAGED HOUSES DISPLACED DAMAGED OFFICES DAMAGED FACILITIES DAMAGED EDUCATIONAL DAMAGED WORSHIP DAMAGED HEALTH MISSING INJURED FACILITIES FACILITIES FACILITIES DAMAGED BRIDGES Source: National Agency of Disaster (BNPB). Disaster Infographic 2023. https://bnpb.go.id/infografis/infografis-bencana- tahun-2023 This fact is reflected in various statistics: over the past 30 years, Indonesia has experienced an average of 289 natural disasters per year, claiming on average more than 8,000 lives annually2. The 2023 World Risk Index report ranked Indonesia second out of 192 countries for its vulnerability to disasters (Figure 2), just behind Indonesia’s neighbor, the Philippines, which ranks first. 2 Direktorat Jenderal Kekayaan Negara (DJKN). 2023. ABMN Report 2023. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 9 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Figure 2: World Risk Index 2023 Source: World Risk Report 2023. Bündnis Entwicklung Hilft, Ruhr University Bochum and Institute of International Law of Peace and Armed Conflict 2023. https://weltrisikobericht.de/en.   These disasters not only cause immense human suffering but also wreak significant economic damage. Rebuilding public infrastructure and people’s homes and livelihoods after disasters significantly strains the national budget. Figure 3 highlights the financial protection gap between the average annual direct economic costs of disasters (IDR 22.8 trillion or US$ 1,46 billion) and the amount of the disaster reserve fund available in the State Revenue and Expenditure Budget (APBN), given that the funds available are currently only IDR 3.1 billion (US$ 198 million). In addition to limited budget allocations, the disbursement and distribution system of the disaster reserve fund is inflexible because it needs to follow the annual budget cycle. This presents challenges in post-disaster recovery situations that require a rapid response. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 10 Figure 3: Financing Gap Source: Ministry of Finance Considering the urgency of post-disaster response and recovery funding, the Ministry of Finance (MoF) prepared a National Disaster Risk Financing and Insurance (DRFI) strategy in 2018. There are six government priorities in the DRFI strategy, as follows: 1. Protect the national (Barang Milik Negara, BMN) and regional (Barang Milik Daerah, BMD) public assets3; 2. Protect disaster-prone households and communities, particularly low-income households; 3. Restore the social life of disaster-affected communities; 4. Promote the role of local government, society, and the private sector in disaster risk financing; 5. Develop the domestic insurance market, and 6. Protect government finances. The GoI recognized that a comprehensive risk financing system as outlined in its risk finance strategy is vital to reduce fiscal shocks at the central government, sub-national government, and community, and individual levels. The DRFI strategy also enabled opportunities for disaster risk financing from various sources, from public asset insurance and financing through the Pooling Fund Bencana (PFB) (Figure 4). The GoI integrated the DRFI framework into its annual macroeconomic framework and fiscal policy principles (Kerangka Ekonomi Makro dan Pokok-pokok Kebijakan Fiskal, KEM-PPKF), which was submitted to Parliament in March 2018. Subsequently, the MoF presented its DRFI strategy during the International Monetary Fund/World Bank Group (IMF/WBG) annual meetings held in Bali, Indonesia, in October 2018. 3 At this stage, the ABMN program (as per the acronym) only covers central government assets (i.e., BMN assets). While the 2018 DRFI includes local government assets (i.e., BMD assets), the focus to date has been on BMN financial protection. Options for including BMD assets, either directly within the ABMN program or through another risk financing instrument (e.g., the PFB), are being explored. Currently, the financial protection of BMD assets remains the responsibility of each local government. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 11 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Figure 4: The DRFI Strategy Source: Fiscal Policy Agency (BKF). The DRFI Strategy. https://fiskal.kemenkeu.go.id/strategi-drfi/strategi Founded on Minister of Finance Regulation (PMK) No. 97/PMK.06/2019 on Public Asset Insurance, the GoI implemented its public asset insurance program (Program Asuransi Barang Millik Negara, ABMN), commencing in 2019, to protect government buildings such as office buildings, education and training facilities, and healthcare facilities. Indonesia’s DRFI strategy—with its focus on financial preparedness and public asset insurance— demonstrates a proactive approach to disaster risk management. By diversifying funding sources and ensuring financial security for critical infrastructure, Indonesia is now far better equipped to weather the storms, both literally and figuratively. “Positive things that can be gained from the visit of ASEAN Natural Disaster Research and Works Sharing (ANDREWS) members to Indonesia. First, the legal umbrella (PMK 97/2019) created by DJKN is very effective and efficient in binding ministries and institutions to implement disaster mitigation for the risk of disaster. Considering that Indonesia is an archipelagic country, not a country like Laos, Cambodia, Viet Nam that has only one island. Indonesia is spread out, consisting of islands. Now, this can be united through PMK 97 to implement this ABMN program comprehensively. Secondly, Indonesia has a disaster mitigation platform in the form of a partnership with the government (or public-private partnership).” – Heddy Agus Pritasa, Chairman of ASEAN Natural Disaster Research and Works Sharing (ANDREWS) INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 12 HOW DOES THE ABMN PROGRAM WORK The Government of Indonesia (GoI) prioritizes the protection of national (Barang Milik Negara, BMN) and regional (Barang Milik Daerah, BMD) public assets through its Disaster Risk Financing and Insurance (DRFI) strategy. Recognizing the importance of this, the Ministry of Finance (MoF) issued Minister of Finance Regulation (PMK) No. 97/PMK.06/2019 on BMN insurance to provide a legislative framework and operational foundation for the industry. This initiative ensures financial security for valuable government public assets in the event of unforeseen circumstances. Prior to the implementation of the ABMN program, the use of insurance by the central government’s ministries was ad hoc and subject to individual ministries’ budget and appetite. The implementation of BMN insurance was rolled out strategically. Taking advantage of the momentum generated by the conclusion of the BMN revaluation process in 2019, the MoF went on to establish a pilot project for BMN insurance. The MoF began insuring its own office buildings, education and training facilities, and healthcare facilities as a pilot project for BMN insurance. BMN insurance is provided by an insurance consortium consisting of 75 general and Sharia insurance/reinsurance companies. Figure 5 illustrates how the program has evolved since 2018. A pilot of the ABMN program was launched in 2019, whereby 1,337 office, school, and training facilities, and healthcare facilities were insured for a total of IDR 10.73 trillion (US$ 688 million), with an annual insurance premium of IDR 22.73 billion (US$ 1.5 million). In the following years, the program expanded to include other central government line ministries. Later, in 2023, the BMN insurance policy was implemented by 76 ministries and agencies. In this case, the number of BMN insurance objects increased from the original 1,337 registered numbers (Nomor Urut Pendaftaran, NUP) in 2019 to 10,920 NUP in 2023. The locations of BMN insurance objects are also spread from Aceh to the Papua region. The increase in the number of BMN-insured properties saw an increase in the BMN-insured value in 2023, rising from IDR 10.73 trillion (US$ 688 million) in 2019 to IDR 72.64 trillion (US$ 4.6 billion). In line with this increase in value, the value of BMN insurance premiums also increased from IDR 1.77 billion (US$ 113,585) in 2019 to IDR 124.7 billion (US$ 8 million) in 2023. Figure 5: Realization of the BMN Program for Fiscal Years 2019–23 Comparison of Target vs. Actual Number Comparison of Potential State Assets Value and of Ministries/Agencies Policyholders and Its Realization Insurance Coverage (in Trillion Rupiah) 200.89 200.89 180.00 77 73 77 76 77 76 144.00 128.90 72.64 37.68 50.40 13 13 10.73 17.05 1 1 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Target Number Actual Number BMN Value Insurance Value of Ministries/Agencies of Ministries/Agencies Comparison of Potential BMN Amount and Trend of Premium Value and Claim Value Number of Insurance Objects (in units) (in Billions of Rupiah) 124.82 78,328 83,331 83,331 65,673 70,921 81.19 80.55 50.96 10,920 22.73 5,272 7,716 3.60 0.74 0.98 1,337 2,112 1.77 - 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Total BMN Units Total ABMN Insurance Objects Premium Value Claim Value Source: Ministry of Finance. TVRI Building as one of the BMN Insurance Objects INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 13 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Figure 6 shows a comparison between property insurance premiums and claims, and ABMN premiums and claims in Indonesia since 2019. In 2023, the realization of ABMN insurance premiums was 0.47 percent of the realization of property insurance premiums, while the realization of ABMN insurance claims was 0.01 percent of the realization of property insurance claims. Figure 6: Comparison between ABMN with Insurance Property for Fiscal Year 2019-23 Comparison of Property Insurance Premium Realization Data Comparison of Property Insurance Claim Realization in Indonesia with BMN Insurance Premium Data in Indonesia with BMN Insurance Claim (in billion rupiah) (in billion rupiah) 26,233.4 26,489.0 9,151.5 20,870.0 20,935.0 22,363.1 6,863.0 6,422.0 6,766.0 6,069.0 1.77 22.70 50.95 79.78 124.78 0 0.54 4.55 78.90 0.98 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Property Premium ABMN Premium Property Claim ABMN Claim Source: Ministry of Finance. The BMN insurance product is a bespoke insurance policy approved by the Financial Services Authority (Otoritas Jasa Keuangan, OJK) based on Financial Services Authority Letter No. S-5938/NB.111/2018 on the Approval of ABMN Standard Policies. The BMN insurance is ‘all-risks’ (i.e., it covers all risks except those explicitly excluded), including: (i) fire, lightning, explosion, aircraft, and smoke (FLEXAS); (ii) riot, strike, malicious damage, and civil commotion (RSMDCC); (iii) typhoon, storm, flood, water damage (TSFWD); (iv) earthquake, volcanic eruption, tsunami (EQVET); and (v) terrorism and sabotage (TS). Moreover, the program is handled directly between the client (the MoF and ministries and agencies) and the participating insurance companies (consortium) without going through a broker. Figure 7: ABMN Program Stakeholder Structure CLAIM PAYMENT ESTABLISH JOIN MINISTRIES/ ASSET NATIONAL AGENCIES MANAGER BUDGET UMBRELLA PROCUREMENT BUDGET PROPOSAL CONTRACT INSURANCE POLICY BUDGET ALLOCATION MOF CLAIM PROPOSAL MOF CLAIM USE PROPOSAL & BUDGET REVISED LOSS PERMIT REINSURE ADJUSTER INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 14 “The Disaster Risk Financing Insurance (DRFI) scheme was designed by AAUI, Reasuransi MaiPark Indonesia and DJKN. At that time, it was decided to prioritize public assets (BMN) because, at that time, the potential for losses to public assets in the event of a natural disaster was quite large. At that time, Maipark had more disaster data than other insurance companies, so Maipark calculated the appropriate insurance rate for ABMN. The method of calculating the rate was in accordance with the guidelines because the OJK already had data and reference rates for property insurance, including earthquake insurance. AAUI then took the standard earthquake insurance policy, which had been improved, and consulted with OJKN’s technical team, including the legal department, on what the replacement system would be in the event of a claim. Based on the results of the discussion, a draft of the standard policy for public assets insurance was prepared. The draft policy and the rates agreed by DJKN were then submitted to the OJK for approval. Issuance of OJK Circular (SE OJK) No. S-5938/NB.111/2018 on the Approval of the Standard Policy for Public Assets Insurance as permission from the OJK.” – Dody Dalimunthe, Executive Director of General Insurance Association of Indonesia (AAUI) for 2017-2021 The pilot project not only served as a proof-of-concept but also yielded tangible benefits. The pilot project paved the way for expansion in 2020, when an additional 10 government ministries and agencies joined the program. In early 2020, the MoF also successfully filed and received its first insurance claims for flood damage sustained by service offices in the Jakarta region. This experience underscored the effectiveness of BMN insurance in mitigating financial losses from disasters. Ultimately, by 2021, all government ministries and agencies without exception had insurance coverage for their core assets, such as office buildings, education and training facilities, and healthcare facilities, with a future vision of extending protection to other critical infrastructure, such as bridges, roads, and dams. Complete and up-to-date data were critical to the efficient and accurate implementation of BMN insurance. The data determined the appropriate type and value of BMN insurance premiums. These data needed to encompass details such as asset type, location, age, value, and risk profiles, together with visual documentation. Currently, the Directorate General of State Assets (Direktorat Jenderal Kekayaan Negara, DJKN) utilizes the State Asset Management Information System (Sistem Informasi Manajemen Aset Negara, SIMAN). The SIMAN is a digital platform for managing BMN data that is accessible nationwide. While the SIMAN provides a strong foundation, integration with other systems is necessary. These includes the BMN insurance consortium’s claims system, the government revenue system (SIMPONI/MPN G3), the BNPB InaRISK catastrophe risk map, STAR Jasindo, SENA Maipark, Indonesian Disaster Information Data (Data Informasi Bencana Indonesia, DIBI), Magna, State Property Map Information System (Sistem Informasi Peta Kekayaan Negara, SIPKN), Assessment Information System (Sistem Informasi Penilaian, SIP) and other applications. By consolidating data from these various sources, BMN insurance can be optimized to effectively safeguard Indonesia’s valuable public assets. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 15 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY “MaiPark assessed the risk for BMN in four stages. First, we used MaiPark Catastrophe Modeling (MCM) and the Indonesian Disaster Risk Index (Indeks Risiko Bencana Indonesia, IRBI) to assess the risk of natural disasters. Second, we analyzed and mapped BMN from DJKN. Third, analyzing historical data and risks of 10 types of disasters in Indonesia. Fourth, analyzing pure tariffs for natural disasters and fires.” – Ruben Damanik, Head of Strategic Planning and Risk Management and Senior Catastrophe Modelling, Reasuransi Maipark Indonesia INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 16 TIMELINE Before 2016 – The Directorate of BMN prepared the initial study of BMN and Pooling Fund Bencana (PFB)4 insurance. 2016 – Preparation of Minister of Finance Regulation (PMK) 247/2016 on BMN insurance. 2017 – Revaluation of BMN. 2018 – Series of annual meetings of the International Monetary Fund/World Bank Group (IMF/WBG) in Bali in October 2018. 2019 - Preparation of Minister of Finance Decree (KMK) 97/2019 on BMN insurance. • Preparation of KMK 118/2019 on the stages of implementation of BMN insurance. • Preparation of KMK 280/2019 on the stages of procurement of BMN insurance services. • Preparation of ABMN insurance products. • Preparation of Umbrella Contracts (Kontrak Payung) as the basis for calculating the premium rates. • Socialization with all government ministries and agencies. • First implementation of BMN Insurance. • The MoF filed a claim for damages caused by flooding in Jakarta. 2020 – Revision of KMK 118/2019 concerning the stages of implementation of BMN insurance into KMK 265/2020 (the number of ministries and agencies implementing ABMN Phase 2 changed from 10 to 13 ministries and agencies). • Publication of the ABMN handbook. • Socialization to all government ministries and agencies (due to the COVID-19 pandemic, all business operations were conducted online). • Preparation for ABMN e-learning, which was facilitated by Training Center State Asset and Fiscal Balance (KNPK). • Implementation occurred during the pandemic. • Initial development of the SIMAN module (used only to purchase insurance services and report claims). 2021 – Implementation in all government ministries and agencies. • Implementation of ABMN e-learning for five batches (1,692 government officials participated in the training). 4 The Pooling Fund Bencana (PFB) is a system for collecting and managing money to fund disaster response specifically, with the aim of reducing the financial burden on the State Budget (APBN) by accumulating funds beforehand and potentially transferring some risk through insurance. The PFB will also be used for mitigation efforts to reduce future disaster impacts. The GoI is currently setting up the legal framework for the PFB. (source: https://fiskal.kemenkeu.go.id/strategi-drfi/pooling) INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 17 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY • Preparation of initial studies for object extension. • There was a major disaster, the Mamuju/Majene earthquake in West Sulawesi, Indonesia, which became Indonesia’s ABMN largest claim in history. • Implementation was more complex during the COVID-19 pandemic (see lesson #9). • Presidential Regulation (PP) No. 75/2021 on Pooling Fund Bencana (PFB) was issued. 2022 – ABMN Development. • ABMN e-Learning was included in the training calendar and has since become a mandatory • competence improvement program. • Organized Stress Test Exercises/Claims Training (online, for six ministries and agencies: the MoF, the Food and Drug Authority (Badan Pengawas Obat dan Makanan, BPOM), the Regional Representative Assembly (Dewan Perwakilan Daerah, DPD), the National Government Internal Auditor (Badan Pengawasan Keuangan dan Pembangunan, BPKP), the Attorney General’s Office, and the Ministry of Agrarian Affairs and Spatial Planning/ National Land Agencies (Agraria dan Tata Ruang, ATR/ Badan Pertanahan Nasional, BPN). • Organized Policy Deep Dive Training (offline, for six ministries and agencies: the MoF, the BPOM, the DPD, the BPKP, the Attorney General’s Office, and the ATR/BPN. • Organized BMN Insurance Distance Training by KNPK. • The West Pasaman earthquake occurred on February 25, 2022, and the Cianjur earthquake on November 21, 2022. • First draft of PMK 97 revision (addition of objects, additional funding sources from PFB). • Implementation was more complex during the pandemic (see lesson #9). • Preparation of PMK regarding PP 75/2021 on the Pooling Fund Bencana (PFB). 2023 – Continued development of ABMN. • Further development of the insurance module in the SIMAN application to include the following: o Development of claims submission functions. o Connection to the Insurance Consortium for Public Assets (KABMN) application and the Asuransi Jasa Indonesia (Jasindo) claims system. o Connection to the State Property Map Information System (SIPKN). o Preparation of users for the implementation of the PFB and Environmental Fund Management Agency (Badan Pengelola Dana Lingkungan Hidup, BPDLH) policy. • Organized Offline Policy Deep Dive Training. • Organized online General Insurance/CGI Certificate training for the DJKN, the BMN Bureau, and the DJKN Legal and Advocacy Bureau. • E-learning ABMN and insurance distance-learning classes continue to be implemented as they have become mandatory activities. • Continue the preparation of PMK regarding PP 75/2021 on the Pooling Fund Bencana (PFB). INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 18 LESSON #1: WHERE DID IT ALL BEGIN? DEVELOPING A STRONG VALUE PROPOSITION This section describes how Indonesia is faced with the constant threat of natural disasters, ranking second in the world for disaster risk. This context places an immense financial burden on the GoI, highlighting the inadequacy of existing disaster response mechanisms. To address this challenge, the MoF launched the DRFI strategy in 2018. This section examines how the ABMN program was initiated as a key aspect of the national DRFI strategy. More specifically, this section focuses on the importance of developing a strong value proposition as a first step in the process of fostering buy-in for implementing a public asset insurance program. The devastating impact of these natural disasters, when they do occur, translates into significant economic losses for the GoI, with reconstruction costs straining the budget. The existing disaster reserve fund is insufficient to cover the damage and its distribution is hampered by bureaucratic procedures. Key Activities Undertaken to Start the Program Recognizing the urgency of this issue, the MoF, through the Fiscal Policy Agency (Badan Kebijakan Fiskal, BKF), prepared the DRFI strategy in 2018. This strategy was launched by the Vice President of the Republic of Indonesia in the context of the International Monetary Fund/World Bank Group (IMF/ WBG) annual meetings held in Bali in October 2018. This initiative aimed to build a more disaster-resilient nation. The DRFI strategy combined various financial instruments to create a comprehensive disaster risk financing mechanism. This approach recognized the diverse nature of disaster risks and aimed to ensure that funding would be adequate, timely, targeted, effective, sustainable, and transparent. By recognizing the diverse nature of disaster risks and avoiding a one-size-fits-all approach, the DRFI strategy aimed to significantly improve Indonesia’s overall disaster risk financing system. In addition, one key aspect of the DRFI strategy was the protection of both national and regional (BMN and BMD) public assets. To ensure this, the MoF issued a regulation (PMK No. 97/PMK.06/2019) that serves as the legal framework for public asset insurance. In addition, Law No. 1/2004 states that the MoF has the authority to regulate central government assets, while Government Regulations (PP) No. 27/2014 and No. 28/2020 state that the MoF, as the asset manager, must formulate regulations on the insurance of public assets. Key Stakeholders A critical aspect of the program’s success was working with key stakeholders, including ministries and agencies. These included the General Insurance Association of Indonesia (Asosiasi Asuransi Umum Indonesia, AAUI) as the industry association and the OJK as the regulator, to sensitize the concept of public asset insurance for Indonesia, clarify industry expectations for a program, and test industry appetite and capacity to underwrite a program. In addition, the National Public Procurement Agency (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah, LKPP) was involved in streamlining the insurance procurement process, and the Indonesian Competition Commission (Komisi Pengawas Persaingan Usaha, KPPU) ensured a fair selection of insurance providers. Most importantly, the GoI established the Insurance INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 19 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Consortium for Public Assets (Konsorsium Asuransi Barang Milik Negara, KABMN) to develop the local insurance strategy. More fundamentally, the GoI wanted to know if the insurance industry was ready and willing to take advantage of this opportunity. Key Messages of the Value Proposition Once the GoI had a customized insurance product, the GoI began the value proposition process. Three key messages were used to highlight the unique benefits of the ABMN program: 1. It provided government ministries and agencies with a reliable source of funding to rebuild the BMN after natural disasters. 2. ABMN policies were affordable, with a single rate significantly lower than standard products. 3. The coverage was comprehensive, covering all risks except for pre-defined exclusions. The MoF engaged across government ministries and agencies to advocate for the implementation of public asset insurance. This value proposition process was designed to generate interest in the ABMN program across not only government ministries and agencies, but also the insurance industry. Initially, the MoF took the lead in outreach programs, but it collaborated with stakeholders throughout the process. Advocacy efforts also included addressing potential concerns, with the MoF taking a collaborative approach and engaging with opposing voices in policy discussions. In addition, leadership from senior MoF officials (“tone from the top”) helped build broader support. Developing an attractive value proposition was especially important given the voluntary nature of line ministry participation and an environment in which insurance as a concept was new and subject to unwarranted caution. “The more assets we have, the higher the value will be. We need to protect and secure them. We must tell them that protection is not an investment. Some people say they pay more premiums. There are years where premiums are higher than claims. So, we must explain. Does it mean that if we insure a car, do we expect a collision to occur in order for the insurance to pay out? If it doesn’t happen, we should be grateful. Getting there is not easy. So, we must continue to talk to them.” – Encep Sudarwan, Director, Formulation of State Assets Policy (Perumusan Kebijakan Kekayaan Negara, PPKN), Directorate General State Assets (Direktorat Jenderal Kekayaan Negara, DJKN), Ministry of Finance of Indonesia INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 20 Government of Indonesia (GoI) Actions Despite the GoI’s confidence in implementing the ABMN program with its customized insurance product, the GoI recognized the need to create a dynamic insurance market—one that could sustain a major increase in the coverage capacity of insurance objects. The GoI addressed this challenge through continuous outreach, emphasizing the benefits of the program. In Implementing the ABMN program the MoF in association with the AAUI negotiated the creation of an insurer consortium, which included almost all the general insurance industry. This proved to be a valuable partnership for both the government and the industry. In conclusion, the well-defined value proposition facilitated the initial pilot implementation of ABMN policies. The key lesson is to identify the benefits of risk-financing products. It is also crucial to strive for innovation and improvement over existing policies in order to ensure a compelling value proposition. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 21 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY LESSON #2: ESTABLISHING A FIT-FOR-PURPOSE REGULATORY FRAMEWORK This section describes the process undertaken by the MoF to develop legislation and regulations for its public asset insurance program. The section outlines the existing legal framework that needed to be considered, the specific program regulations that were created, the approach taken to understand legislative needs, and the approval process. It also outlines the benefits and challenges of using this approach. Existing Legal Framework Before introducing program-specific legislation, it was essential to gain a comprehensive understanding of the existing legal framework. This included identifying relevant laws and regulations that could affect the design and implementation of the program. Several pre-existing regulations were critical, including the following: 1. Undang-Undang (UU) No. 24/2007 on Disaster Management: This law was relevant given that the public asset insurance program aimed to cover disaster-related losses, and ensure coordination and consistency with current disaster management efforts. 2. UU No. 40/2014 on Insurance: This law is the regulatory framework that governs the general operations of all types of insurance, including life insurance, general insurance, Sharia insurance, reinsurance (conventional and Sharia), insurance and reinsurance brokers, agents, and loss adjusters. It establishes the legal basis for public asset insurance, potentially defining insurable assets, types of insurance, and core program principles. UU No. 40/2014 on Insurance was later refined by UU No. 4/ 2023 on the Development and Strengthening of the Financial Sectors. 3. Peraturan Pemerintah (PP) No. 27/2014 on the Management of Public and Regional Assets. Article 45, paragraph 1, states that asset managers are required to determine insurance and coverage policies to safeguard BMN, taking into account the GoI’s financial capacity. 4. Peraturan Presiden (Perpres) No. 16/2018 on the Procurement of Goods and Services. This decree outlines the procurement procedures that the public asset insurance program must follow when purchasing insurance services. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 22 Program-Specific Regulations Several program-specific regulations were then created for the program: 1. PMK No. 97/2019 on BMN Insurance: This PMK elaborates on details related to BMN insurance, potentially specifying insurance coverage, premiums, and claims procedures. 2. KMK No. 253/ 2019 on the Stages of the Implementation of Public Assets Insurance in the Ministries and Agencies (update). This KMK is similar to KMK No. 326/2019 in explaining insurance objects. 3. KMK No. 118/ 2020 on the Stages of the Implementation of Public Assets Insurance in Ministries and agencies. 4. KMK No. 265/2020 on the Stages of the Implementation of Public Assets Insurance in the Ministries and Agencies (update). 5. KMK No. 268/ 2019 on the Stages of the Appointment of the KABMN. 6. KMK No. 280/ 2019 on the Stages in the Procurement of BMN Insurance Services by Ministries and Agencies. 7. Circular Letter of the Financial Services Authority No. S-5938/NB.111/2018 on ABMN Standard Policy Approval. “The OJK Circular on premium rates for property and motor vehicles already existed when the ABMN program was implemented. In the OJK circular, there were already rates that were differentiated based on region. However, these rates were not applied to the ABMN program because the insured public assets were located all over Indonesia, so it was not possible to use rates based on regions. Finally, the OJK worked with actuaries and AAUI to formulate a single rate for ABMN. Based on the discussion, the premium value of 1.96 was established. Then, for the ABMN policy, it refers to the standard policy made by AAUI. The policy was issued by Jasindo and all insurance companies that are members of the consortium get a percentage share that is assessed based on capital. After that, the policy is registered as a product with the OJK.” – Asep Iskandar, Head of the Department of Licensing, Special Inspection, and Quality Control of Insurance, Guarantee and Pension Funds, Financial Services Authority (Otoritas Jasa Keuangan, OJK) INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 23 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Developing the Regulations Developing effective legislation requires a clear understanding of program needs. The MoF conducted several activities with this in mind, as described below: 1. Initial studies: Several studies explored international best practices and potential risks associated with public asset insurance. These included benchmarking studies of the experiences of the Governments of Australia, New Zealand, and the Netherlands, together with a broader review of experiences from other countries with public asset insurance. 2. Stakeholder discussions: Engaging with relevant parties such as, the AAUI, the LKPP, and the OJK was critical. These discussions likely helped identify potential challenges early on, refine program details, and ensure alignment with existing regulations. 3. Outline of regulatory content: Developing an outline of regulatory content in terms of institutional management, operational setup, and data requirements associated with the regulation was also important. It is crucial to recognize that legislation and regulations can be challenging to modify or rectify if they are not implemented correctly from the beginning. Furthermore, poor implementation can result in reputational damage, as trust and confidence are eroded. Therefore, it was essential to adopt a comprehensive approach to ensure that the legislation addressed the program’s core objectives, while also taking into account practical implementation issues and potential obstacles. Approval Process Program implementation underscores the importance of an efficient permitting process. In the Indonesian case, the regulations were prepared rapidly, which may have accelerated program implementation. In addition, if stakeholders are engaged and involved in program design early on, they are more likely to develop a greater sense of ownership and be less likely to create obstacles along the way. This highlighted the benefits of the following: 1. Early stakeholder engagement: By engaging stakeholders early on, potential concerns could be addressed proactively, facilitating the approval process; and 2. Transparency and communication: Clear communication with stakeholders regarding the objectives of the program and the rationale behind the regulations helped to build support and expedite approval. Benefits Program implementation suggests several benefits associated with a legislative/regulatory approach: (i) Easier implementation: regulations can provide a clear framework for program implementation, ensuring consistency and reducing ambiguity for stakeholders; and (ii) Reduced resistance: by establishing clear rules and procedures, regulations can potentially minimize resistance from stakeholders who better understand their roles and responsibilities within the program. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 24 Challenges Despite the overall benefits of the program, implementation nonetheless faced some challenges given that the MoF did not have extensive knowledge of public asset insurance practices and processes at the start of the process. This underscores the importance of: 1. Working with experts: Working with insurance professionals, risk management specialists, and legal experts ensured that regulations were technically sound and legally compliant; and 2. Capacity building: Investing in training and knowledge-sharing within the MoF helped to equip staff with the necessary expertise for future program management. Government of Indonesia (GoI) Actions Based on the implementation of the program, several key recommendations for developing legislation and regulations for public asset insurance programs are as follows: 1. Stakeholder engagement: Actively engage relevant stakeholders, including insurance companies, regulators, and government agencies with expertise in procurement, finance, and risk management; and 2. Benchmarking: Reviewing and learning from the experiences of other countries with established government asset insurance programs. In conclusion, the development of program-specific legislation and regulations for public asset insurance requires careful consideration of existing frameworks and stakeholder involvement, as evidenced by smooth internal and external approvals. While challenges arose, such as a lack of initial specific expertise, these were effectively mitigated through collaboration with relevant parties. The section’s key takeaways are to involve stakeholders, learn from international best practices, and take into consideration any existing dependencies and constraints. This comprehensive approach should ensure that the regulations are effective, implementable, and accepted by all parties involved. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 25 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Box 1: The Initial Study of BMN and PFB Insurance Studies comparing Indonesia’s BMN with other countries such as Australia, New Zealand, and the Netherlands highlighted the potential benefits to Indonesia of BMN insurance. These studies, conducted in 2014, estimated the value of insured BMN assets to be around IDR 1,800 trillion (US$ 115.5 billion)—a value certain to increase over time. Currently, post-disaster recovery relies heavily on the State Budget (APBN), which faces limitations. The APBN simply cannot cover all emergencies, highlighting the need for mitigation measures. One promising approach comes from Australia’s Commonwealth Cover program. This government-managed insurance fund protects public assets from losses, offering a valuable model for Indonesia. Based on these comparative studies, a proposal had recommended a pilot program focusing on critical government assets. This pilot would have targeted office buildings, health-care facilities, educational institutions, and vehicles. Simulations using OJK rates, the number of participating insurance companies, and the value of insured assets in 10 high-risk cities suggested an annual premium cost of IDR 770 billion (US$ 44.9 million). Drawing on these findings, the initial proposal recommended a pooling fund scheme (the Pooling Fund for Bencana, PFB) as the most suitable option for BMN insurance in the case of Indonesia. Under this scheme, the GoI will manage the funds and be allowed to make low-risk investments to generate additional revenue. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 26 LESSON #3: HARMONIZING WITH GOVERNMENT ADMINISTRATION REQUIREMENTS This section describes the evolution of the ABMN program in Indonesia, and the importance of integrating and complying with broader government regulations and protocols (e.g., procurement regulations, public financial management regulations, asset management regulations, and DRM regulations). It emphasizes the significance of public administration regulations in defining the program’s protocols and processes. This section differs from the previous section (Lesson #2), in that Lesson #2 concerns regulations that are specific to the program, while this section looks into other regulations that might influence the program. This section describes the key regulations, the challenges of integrating them with existing insurance practices, and the benefits of successful harmonization. Public Administration Regulations The protocols and processes of the ABMN program are fundamentally shaped by several public administration regulations. The following are the key institutions and regulations involved in the program: 1. Indonesian Competition Commission (Komisi Pengawas Usaha Indonesia, KPPU): The KPPU played a crucial role in establishing the KABMN as the sole service provider for the program. This ensured fair competition within the insurance industry. 2. National Public Procurement Agency (Lembaga Kebijakan Pengadaan Barang/ Jasa Pemerintah, LKPP): The LKPP played a significant role in the formulation of KMK No. 280/2019 on the procurement of goods and services. This KMK regulates the procurement procedures for insurance services under the ABMN program. 3. Financial Services Authority (Otoritas Jasa Keuangan, OJK) and General Insurance Association of Indonesia (Asosiasi Asuransi Umum Indonesia, AAUI): The OJK and the AAUI were instrumental in designing the ABMN insurance product. Their involvement ensured compliance with insurance industry regulations and standards for construction/building insurance products. 4. Directorate General State Assets (DJKN), Directorate General of Budget (DJA), and ministries and agencies: The DJKN, the DJA, and ministries and agencies follow Regulation (PMK) No. 97/ 2019 regarding Insurance Budgeting for Public Assets and Regulation (PMK) No. 150/ 2014 and PMK No. 153/ 2021 regarding Insurance Expenditure for Public Assets. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 27 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY The flow of the ABMN planning process is as shown in the figure 8 and the flow of the BMN insurance budgeting and procurement process is as shown in the figure 9. Figure 8: The Flow of ABMN Planning Process Figure 9: The Flow of BMN Insurance Budgeting and Procurement Process Source: Handbook for Public Assets Insurance Source: Handbook for Public Assets Insurance Monitoring Compliance Compliance is continuously monitored through various methods: 1. Regular reports: The KABMN routinely submits semi-annual and monthly reports detailing implementation by service providers, and the financial health of participating insurance companies. 2. Regular status report: The DJKN and government ministries and agencies can assess which claims are being reported to insurers. 3. One Person-in-Charge (PIC) in the DJKN for each government ministry and agency: A designated PIC for each ministry and agency monitors the implementation of the ABMN program within their respective departments and the coordinating team for each PIC oversees the implementation of the ABMN program in their respective departments. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 28 “There is no specific performance supervision for insurance companies that are members of KABMN. All insurance companies, whether they are members of ABMN or not, will be treated equally by OJK in accordance with existing procedures. The supervision conducted by the OJK consists of off-site and on-site supervision. Off-site supervision is based on reports submitted by the company, including reports submitted by stakeholders, such as monthly financial reports, annual reports, and other reports (such as anti-fraud strategy reports). The next is on- site supervision, which OJK conducts directly with the insurance company. The results are very comprehensive, but with a limited number of people, of course, OJK can only conduct on-site supervision for several insurance companies.” – Munawar Kasan, Director, Supervision of General Insurance and Reinsurance, Financial Services Authority (Otoritas Jasa Keuangan, OJK) Results of Non-Compliance Failure to comply with these regulations could have significant consequences. The ABMN products could encounter resistance from insurance companies accustomed to existing standard products. This could in turn hinder program adoption and limit the pool of insurers willing to participate. Consultation and Collaboration: Key to Success To ensure full consideration of all relevant regulations, close collaboration with the following stakeholders was essential: 1. The KPPU: Its expertise in business competition ensured fair market practices within the ABMN program. 2. The LKPP: Its guidance ensured compliance with government procurement regulations for insurance services. 3. The OJK and the AAUI: Their involvement was critical in developing ABMN policy products that were consistent with insurance industry standards and practices. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 29 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Integrating Public Administration Requirements into Insurance: Navigating Challenges The main challenge was to create standardized ABMN products. The GoI needed to develop new policies that would meet its specific needs (custom-made) and, at the same time, be readily accepted by both domestic insurers, and domestic and/or foreign reinsurers. To overcome this hurdle, the MoF—more specifically the DJKN—actively engaged with the OJK, the AAUI, the KABMN, and the World Bank Team to jointly design these ABMN policy products. This collaborative approach ensured that the products met the GoI’s needs while remaining commercially viable for the insurance industry. The MoF also faced other implementation challenges from some government ministries and agencies related to the procurement process. Specifically, concerns arose regarding contracting with a single ABMN service provider, despite regulations outlining this process in KMK No. 280/2019. To address this, the MoF promoted the participation of the ABMN consortium (KABMN) in ministries and agencies through targeted socialization programs. In this way, the consortium was able to directly address the concerns of ministries and agencies, and explain the procurement stages involved in the acquisition of ABMN services. Program Compliance The ABMN program complies with government regulations through a robust internal and external audit structure. Internal regulators such as the Government Internal Oversight (Aparat Pengawasan Internal Pemerintah, APIP) monitor all regulations and legal foundations of government policies. In addition, external auditors from the State Audit Agency (Badan Pemeriksa Keuangan, BPK) conduct regular audits and inspections. Benefits of Harmonization By harmonizing with government administrative requirements, the ABMN program achieved significant benefits: 1. Industry acceptance: ABMN products were accepted by both the ministries and agencies and the insurance industry, eliminating the resistance typically encountered when introducing new products. 2. Reinsurance opportunities: Harmonization facilitated the acceptance of ABMN products by the foreign reinsurance industry, thereby expanding the program’s access to qualified financial support. 3. Conflict resolution: Harmonization helped to avoid conflicts with other government financial and administrative process regulations, for example, procurement regulations. Program Improvement One key area for improvement is to develop a more comprehensive Service Level Agreement (SLA) by Jasindo as the issuer of the KABMN policy, which has greater buy in from all stakeholders. This would help to foster greater harmonization. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 30 “AAUI, DJKN and OJK as regulators are directly involved and there is three-way communication in the process of formulating ABMN policy products. OJK supervises AAUI, then DJKN as a service user becomes an inseparable part.” – Budi Herawan, Chairman of General Insurance Association of Indonesia 2023-2026 Government of Indonesia (GoI) Actions Based on the experience of the ABMN program, several key recommendations are made, taking into account the nuances of harmonizing with governmental administrative requirements in an insurance context: 1. Cross-ministerial legislation and regulations: Identify legislation or regulations across government ministries and agencies that may interact with and affect ABMN program regulations, such as procurement regulations, public financial management regulations, and disaster risk management regulations. 2. Stakeholder collaboration: Actively engage all relevant stakeholders, including regulators, industry associations, and insurance providers, to develop regulations and risk mitigation products that meet everyone’s needs. This simultaneously fosters both program acceptance and optimizes the benefits. 3. Monitoring and evaluation: Implement robust monitoring and evaluation practices. In conclusion, compliance with government regulations was critical to the success of the ABMN program. By working with entities such as the KPPU, the LKPP, the OJK, and the AAUI, the program ensured that its products were not only compliant, but also readily accepted by the insurance and reinsurance industry. This collaborative approach, coupled with ongoing monitoring by internal and external auditors, fostered a program that met government requirements while remaining commercially viable. While creating customized yet market-friendly products presented challenges, the program’s emphasis on stakeholder engagement and ongoing evaluation ultimately paved the way for a successful risk mitigation strategy. To achieve optimal results, it is essential to conduct thorough research, collect valid data, engage stakeholders, and conduct robust monitoring and evaluation. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 31 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY LESSON #4: DECIDING ON A REALISTIC APPROACH (TAKING A STAGED APPROACH TO IMPLEMENTATION) This section highlights the importance of a staged rollout in achieving the program’s ambitious goals. It also addresses several key challenges, such as: (i) ensuring continuous program improvement; (ii) facilitating capacity building within government entities; and (iii) overcoming a lack of insurance literacy among public officials. The Benefits of a Staged Approach to Program Growth The MoF opted for a staged implementation of the ABMN program in order to achieve several objectives. First, the gradual rollout of the program allowed for the evaluation of each phase. This continuous feedback loop allowed for improvements and helped to ensure better policy design for subsequent phases. Second, the staged approach gave government ministries and agencies valuable time to prepare for participation in the ABMN program. This included building internal capacity and understanding the requirements of the program. The approach was implemented in stages (Figure 5), with each stage building on the previous one: 1. Pilot Program: Initially, only the MoF. Over time, participation expanded to include other ministries, agencies, and eventually sub-national governments. 2. Capacity building: Government officials were trained to improve their understanding of insurance. This built on a starting point of no insurance training and expanded to include a variety of training and education programs. 3. Data improvement: Data collection had become more comprehensive and accurate. SIMAN version 1 focused on basic asset details. SIMAN version 2 introduced additional data points such as asset risk ratings, geospatial coordinates, and integration with Indonesian disaster maps. 4. Gradual expansion: Initially, coverage was limited to specific asset classes such as office, education, and healthcare buildings. The number of buildings covered by each participating ministry or agency was then gradually expanded. 5. Premium sharing: Discussions are underway to explore the possibility of the PFB co-financing insurance premiums for participating ministries and agencies. This will be a possible future development as the program moves forward. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 32 Figure 10: Staged Implementation of the ABMN Program Integrating Expanding asset with the Growing year on scope (e.g., Pooling Fund year line ministry Strengthening infrastructure Bencana (PFB) participation asset, risk, and assets) insurance data and Improving line information ministry staff systems capacity and capability Source: Greg Fowler, the Indonesian State Asset Program Presentation Slide. The ultimate goal of the program is to achieve comprehensive insurance coverage for all government BMN held by various ministries and agencies. This ambitious goal required a staged approach to ensure smooth and successful program implementation. To facilitate growth in program participation, as the implementing agency the DJKN provided dedicated support to each ministry and agency. This included providing comprehensive support and conducting intensive socialization programs to increase awareness and understanding of the ABMN program. Challenges when Implementing a Staged Approach Challenges such as staff turnover were addressed by identifying dedicated risk/insurance champions, integrating training into annual calendars, and ensuring consistent learning opportunities. Going forward, the program will focus on deepening the understanding of the claims process. However, the program faced challenges due to the lack of insurance literacy among government officials and a general lack of awareness about the benefits of the program. This challenge was addressed through the pre-defined staged approach established by KMK No. 118/2020 and KMK No. 265/2020 on the Stages of the Implementation of Public Assets Insurance in Ministries and Agencies. These two regulations provided clear guidelines on the scope of the program, participating ministries and agencies, and the insured objects. The important role of a Person-in-Charge and strong leadership support was also key to the success of this approach. This clearly defined approach was instrumental in ensuring a smooth rollout of the program. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 33 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Government of Indonesia (GoI) Actions To ensure effective planning and implementation, the DJKN has appointed a Person-in-Charge (PIC) for each ministry and agency and a PIC for the State Public Insurance Sector (BMN). Leadership from senior DJKN officials was another critical factor in driving program adoption. Without a dedicated PIC and strong champions within the leadership of the DJKN, progress could have been hampered by resistance and apathy from ministries and agencies that may have perceived the program as being unimportant. Box 2: A Story of Perseverance and Progress “For years, there was a regulation (PMK No. 247/2016) to protect Indonesia’s state assets through insurance, but it remained dormant. Then Mr. Isa Rachmatawarta came as the new Director General of State Assets. As an insurance expert, Mr. Rachmatawarta immediately understood the importance of Public Assets Insurance (ABMN). Meeting Mr. Rachmatawarta was a turning point. Together, we spearheaded the transformation of PMK No. 247/ 2016 into PMK No. 97/ 2019. Imagine all the assets in Indonesia that were previously uninsured becoming insured. The two main objectives in formulating PMK No. 97/2019 were to protect the ever-increasing value of state assets and to ensure transparency and accountability. However, progress has been challenging. Insurance penetration in Indonesia was abysmal, with less than 3 percent and government ministries and agencies prioritizing buying cars and buildings over protecting their assets. We said anything new is difficult, but difficult doesn’t mean impossible. We persevered. That perseverance led us to the World Bank and its Disaster Risk Financing and Insurance (DRFI) program, a lifeline of international exposure and expert guidance. There was no existing insurance model for public assets (BMN). Transparency and accountability were paramount. We wanted a system with strong Standard Operating Procedures (SOPs) and good governance. After much deliberation, a consortium model emerged as the perfect solution, taking the burden off government ministries and agencies. Convincing government ministries and agencies was a marathon, not a sprint. We motivated, encouraged, and raised awareness. Our strategy is always to look for key people. I’d go directly to the heads of the bureaus, or even the secretaries general, to explain the importance of ABMN. We called it the “Safari SecGen” approach, a determined effort to secure buy-in at the highest levels.” – Encep Sudarwan, Director, Formulation of State Assets Policy (Perumusan Kebijakan Kekayaan Negara, PPKN), Directorate General State Assets (Direktorat Jenderal Kekayaan Negara, DJKN), Ministry of Finance of Indonesia INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 34 The staged approach had several advantages. It promoted continuous improvement through ongoing evaluation and feedback, while providing a manageable framework for capacity building within ministries and agencies. This capacity-building initiative, which involved working with relevant ministries and agencies, used a variety of training methods to increase knowledge of the ABMN. In conclusion, the staged implementation of the ABMN program proved to be an effective strategy, as it involved a step-by-step approach that allowed for early lessons to be learned and adjustments to be made before further expansion. This set the program up for success by minimizing mistakes in the approach, especially in an environment where insurance was new and building trust was paramount. By prioritizing continuous evaluation, capacity building, and addressing challenges such as budget constraints and lack of awareness, the program is now making steady progress toward its goal of achieving comprehensive coverage of all government assets. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 35 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY LESSON #5: THE IMPORTANCE OF DATA ACCURACY AND AVAILABILITY This section explores the data management strategies behind Indonesia’s Sistem Informasi Manajemen Aset Negara (SIMAN) database, used for the ABMN program and several other applications such as Sistem Informasi Peta Kekayaan Negara (SIPKN) and Sistem Informasi Penilaian (SIP). The section details the program’s background, data collection methods, usage, benefits, challenges, and future improvements. Background The ABMN is a critical initiative that protects the GoI’s vast portfolio of assets. Effective data management is critical to the success of the program, ensuring informed decision-making, risk mitigation, and overall program efficiency. “The key to being able to do all this is data. When we presented in Tokyo in 2018, we were appreciated for having complete data, including data on the number, value, location, and distribution of BMNs, because it takes a lot of money and a lot of time to do that.” – Encep Sudarwan, Director, Formulation of State Assets Policy (Perumusan Kebijakan Kekayaan Negara, PPKN), Directorate General State Assets (Direktorat Jenderal Kekayaan Negara, DJKN), Ministry of Finance of Indonesia The SIMAN is a web-based application that supports the entire asset management lifecycle, including asset planning, deployment, utilization, maintenance, administration, disposal, and transfer. Asset managers (the DJKN, the DJKN regional offices, and the KPKNL) and users (Unit Akuntansi Pengguna Barang, UAPB) can access the SIMAN to manage their assets. The objectives are: 1. The BMN management process becomes faster, more efficient, and digitally documented; 2. The BMN management process can be monitored online by managers and users; 3. Completing the BMN data for asset management needs; and 4. Integrating the BMN management process into one system. Data Collection The initial definition of data requirements in the SIMAN focused on detailed asset information, including asset codes, names, registration numbers, areas and locations, and asset values (book, acquisition, and market values, which are suitable for accounting purposes but not for insurance purposes, as they do not represent replacement values). In the SIMAN application, the data were supplemented with details of the number of rooms, building structures, photographs, and fixtures within the insured assets. As the program evolved, additional data needs emerged, including asset risk ratings, asset coordinate points, and Indonesian disaster maps (Box 3). These additions were critical for data analysis purposes. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 36 Data Usage Asset data play a key role in the risk modeling that is fundamental to setting ABMN insurance premiums. By analyzing asset characteristics, risk profiles, and historical data, government ministries and agencies can make informed decisions about premium pricing to benchmark against insurance industry pricing. The second point is that detailed risk modeling allows the MoF to identify critical assets and prioritize them for disaster risk financing attention. This is particularly beneficial when there is a limited budget for insurance and asset selection is required, because not all assets can be insured. Benefits The data management approach adopted for the ABMN program yielded two significant benefits. First, the current ABMN premiums were considered to be fair to the GoI and reflected the actual risks associated with each asset. Second, the determination of premiums and policy aspects under the ABMN could be fully justified and supported by data, ensuring transparency and accountability to the State Audit Agency (BPK). Challenges Data management for the ABMN program faced two major challenges: 1. Ensuring complete and accurate data was the main obstacle. The MoF addressed this by refining the SIMAN, upgrading the SIMAN from version 1 to version 2 and issuing PMK No. 118/2023 on the SIMAN, and by working with Reasuransi Maipark Indonesia, the KABMN, and the World Bank experts to improve data analysis capabilities. 2. The MoF initially lacked the expertise to conduct data analysis and risk modeling. To address this, the MoF undertook collaboration with data-analysis and risk-modeling experts. 3. Asset valuations in the past were for accounting purposes. Therefore, they were depreciated book values, fair values, or acquisition values. However, insurance requires a replacement value (which allows the amount of claim received to be more optimal). The DJKN is currently working on updated valuation methods and related regulations to address this issue. The risk of incorrect valuations increases the likelihood that properties will be underinsured and that ministries and agencies will not receive the insurance settlements that they need to rebuild a building after a loss event. Data Management Strategies Data management strategies for the ABMN program were developed with careful consideration of dependencies and constraints: 1. Integration with existing systems: Data management solutions were designed to integrate seamlessly with existing government systems, minimizing disruption and maximizing compatibility. 2. Data governance and security: Robust data governance and security protocols were implemented to protect sensitive asset information and prevent unauthorized access. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 37 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Future Improvements Continuous improvement is essential for effective data management: 1. Improve data quality: Improving the completeness and accuracy of the SIMAN data, possibly using Artificial Intelligence (AI)-based data-cleaning techniques, as well as integrated mapping to allow for sense-checking of locations and geographic aggregations. 2. Advanced analytics: Leveraging advanced analytics tools and techniques to extract deeper insights from asset data to support informed decision-making. 3. Real-time data integration: Integrating real-time data sources to enable dynamic risk assessment and proactive risk mitigation strategies. 4. Development of the claims management module: Developing the claims management module to increase efficiency, and improve accuracy and data analysis. Government of Indonesia (GoI) Actions There are several valuable lessons for developing data strategies for public assets insurance program: 1. Clearly define data needs: Clearly define the data requirements for the property insurance program and ensure alignment with program objectives. 2. Prioritize data quality: Emphasize data quality from the outset by establishing rigorous data collection, validation, and cleansing procedures. 3. Establish a robust data management system: Implement a robust data management system that ensures data integrity, security, and accessibility. 4. Embrace data-driven decision-making: Integrate data analytics into decision-making processes to promote evidence-based policy formulation and resource allocation. 5. Seek expert collaboration: Collaborate with data-analytics and risk-modeling experts to enhance data management capabilities, identify risk-modeling options and best practices, and ultimately leverage the benefits of modeling as a tool for risk selection, premium-setting, and risk-financing appetite. In conclusion, the SIMAN database has evolved from a basic system for BMN insurance procurement into a valuable tool for risk modeling and informed decision-making. While challenges remain in terms of data accuracy and completeness, the GoI is actively working to make improvements through collaboration and the use of new technologies such as AI. The key takeaways are to clearly define data needs, prioritize data quality, and leverage data for evidence-based policymaking. By following these steps, governments can establish a robust data management system that supports informed decision-making and program effectiveness. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 38 Box 3: Updating the SIMAN Application The Directorate of State Asset Management and Information Systems (Direktorat Pengelolaan Kekayaan Negara dan Sistem Informasi, PKNSI) developed the SIMAN application in 2017, with the initial purpose of managing inventory for insurance purposes. The data source for this application has undergone several transitions, starting with the SIMAK application, moving to the SAKTI application, and finally settling on the SIMAN application itself. The SIMAN application focuses on information related to insured assets. This includes the number of assets purchased, their purchase price, and their condition at the time of purchase. When dealing with earthquake insurance for buildings, the application helps to determine the necessary parameters for calculating the appropriate insurance coverage. The application uses two types of insurance values: acquisition value and book value. The acquisition value is derived from the revaluation process carried out between 2018 and 2019, or from the fair value of the asset. The book value, on the other hand, is calculated by subtracting depreciation from either the fair value or the acquisition value. During development, inconsistencies were discovered between the acquisition values and the book values stored in the application. This led to discussions about including additional parameters for more accurate valuations. These parameters include details such as the number of floors, building materials, total building area, and location. In collaboration with the Directorate of Formulation of State Assets Policy (Direktorat Perumusan Kebijakan Kekayaan Negara, PKKN), the development team is working to make these previously optional attributes mandatory within the application given their importance for insurance purposes. The main challenge during development was data validation. Version 1 of the SIMAN application lacked any form of data validation, relying solely on user input. To address this, version 2 incorporates a three-stage validation process that includes user input, a verification stage, and finally an approval stage to ensure data accuracy. Another barrier to development was the difficulty of obtaining complete data. Although the data reside in several different ministries and agencies, they can be difficult to obtain. For example, land data are managed by the Ministry of Agrarian Affairs and Spatial Planning/ National Land Agencies (Kementerian Agraria dan Tata Ruang/Badan Pertanahan Nasional, ATR/ BPN) and include different types of land and areas. Access to these data is critical because they can be linked to building data to identify affected properties after a disaster. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 39 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Previously, under- or over-insurance was not a problem due to errors, but rather due to inaccurate determination of the required insurance coverage. However, the PKKN and the Assessment Directorate are working together to update insured values of the BMN. There are two major challenges in this process. First, how to update insured values to reflect the current situation. Second, each region has different disaster risks. Despite the challenges, these efforts have resulted in the insurance values in the application being closer to the actual values of the insured assets. Development of the SIMAN application is ongoing. The ultimate goal is for the application to generate parameters that not only determine the insurability of an asset but also provide an estimated insurance value. The SIMAN application is an evolving tool designed to streamline asset management for insurance purposes. By addressing data validation challenges and incorporating additional parameters, the application aims to provide a more accurate and efficient system for determining asset insurability and insurance value. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 40 LESSON #6: PARTNERING WITH THE PRIVATE SECTOR This section outlines the rationale behind the Insurance Consortium for Public Assets (Konsorsium Asuransi Barang Milik Negara, KABMN), a collaborative effort between the GoI and the insurance industry. It details the shortcomings of the previous individual insurance procurement approach, the engagement with insurance companies, the criteria used to select insurers, the consortium’s formalization process, and the broader industry considerations that were factored into the decision to create the KABMN. Furthermore, this section outlines the methods used to monitor the consortium’s performance, the benefits of the industry partnership approach, the challenges encountered during implementation, and the strategies employed to address those challenges. Background Before forming the KABMN consortium, government ministries and agencies had procured insurance policies individually from private insurance companies. This approach, outlined in Regulation PMK No. 247/2016, presented challenges regarding control, accountability, and fairness. The independent nature of these contracts made them susceptible to abuse, hindered government accountability measures, and risked creating an uneven playing field for insurance companies. The KABMN emerged as a solution to these problems. Recognizing the need for a more centralized and transparent system, the GoI opted for a collaborative approach. This is aligned with the DRFI strategy. One of the key objectives of the strategy was to develop the local insurance industry. The ABMN program offered a mutually beneficial solution, providing a development opportunity for the local market and enabling GoI to achieve its risk transfer objectives. “Imagine if government ministries and agencies each bought from insurance companies, the service standards and policy contents would be different. With the consortium form, everyone has the same standards. It will be the same everywhere through a consortium. This form of consortium is common in Indonesia and has proven to be successful.” – Heddy Agus Pritasa, Chairman of the KABMN Technical Committee Selection Criteria The selection of consortium members was based on specific criteria. Insurance and reinsurance companies interested in participating in the KABMN needed to demonstrate financial strength through a minimum capital requirement of IDR 150 billion (US$ 9.6 million), a robust risk-based capital (RBC) ratio of at least 120 percent, a minimum liquidity ratio of 100 percent, and a track record in catastrophe insurance. The rationale behind these criteria was that the GoI wanted to ensure that it was dealing with insurers that could pay claims when it counted, and that would survive and continue to operate after a significant natural disaster. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 41 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Consortium Formalization The AAUI played a critical role in formalizing the consortium by spearheading the collaboration of various insurance companies in creating a reinsurance consortium specifically designed to manage BMN risks. This format demonstrates the GoI’s commitment to refining and optimizing the consortium model, such as the inclusion of Sharia insurance companies and increasing the number of insurance companies that meet the selection criteria to participate in the consortium, including involving foreign insurance/reinsurance parties as reinsurance/retrocession when domestic capacity is insufficient. Industry Considerations Maintaining a dynamic and healthy insurance market environment is paramount. The KABMN recognized the potential impacts of factors such as rising reinsurance costs and evolving domestic insurance capacity as insurance needs grow. These factors are continuously monitored and addressed to ensure the long- term sustainability of the consortium. Financial Services Authority Regulation (POJK) No. 71/2016 on the Financial Health of Insurance Companies regulates how the KABMN monitors insurance companies. As a regulator, the OJK is responsible for supervising activities in the insurance sector. For example, if an insurance company that is a member of KABMN is on the OJK’s “alert” list, the OJK as a regulator will take follow-up action against that company. When this happens, the KABMN is automatically informed and can take the necessary action, such as excluding the company from KABMN membership “As for the sanction mechanism, OJK has a mechanism. Before imposing sanctions, OJK usually sends a guidance letter. A guidance letter is not a sanction. Its level is lower than the sanction. The company has not violated the regulations but has the potential to violate the regulations. The next level is a warning letter, which is sent when sanctions are imposed. A warning letter is issued when the company has violated the rules. If the company fails to correct its violations, up to three sanctions, then the company’s status becomes a Restricted Business Activity (Pembatasan Kegiatan Usaha, PKU), where the insurance company is not allowed to write new business and can only perform maintenance. The duration of the PKU status varies, it can be three months, six months or one year. The final sanction is the revocation of the business license.” – Munawar Kasan, Director, Supervision of General Insurance and Reinsurance, Financial Services Authority (Otoritas Jasa Keuangan, OJK) INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 42 Performance Monitoring Monitoring the consortium’s performance is essential to ensure its effectiveness. The MoF carefully reviews the KABMN’s routine reports—annual, semi-annual, and monthly. These reports provide insight into the performance of service providers, the financial health of member companies, and overall operational efficiency. Benefits The consortium approach offers significant benefits. The KABMN leverages the combined strength of more than 50 insurance companies, which provides stability in underwriting BMN risk coverage. The Mamuju earthquake in West Sulawesi in 2021 was the first disaster to put the KABMN’s role to the test (Box 4). Other benefits, such as supporting development opportunities for the local industry and providing the industry with an important networking opportunity, illustrate that the single KABMN approach maximizes engagement efficiency and negotiation leverage. Challenges and Mitigation Strategies Implementing the consortium model presented its own set of challenges. One such challenge was to facilitate real-time data-sharing, particularly for claims and policy settlement progress. The MoF is currently addressing this issue by building an integrated system that includes the SIMAN database and a KABMN application. Another challenge is ensuring transparency regarding the financial health of member companies. However, the KABMN’s routine reports address this issue by requiring member companies to disclose their financial condition as stated in POJK No. 71/2016. This level of transparency fosters trust within the consortium and strengthens its overall structure. Government of Indonesia (GoI) Actions The KABMN represents a significant advancement in the management of public asset insurance in Indonesia. Furthermore, the KABMN is well-positioned to guide and assist the MoF in insurance practices and processes going forward. It can also serve as a valuable repository of risk information, such as trends in losses and risk analytics. In conclusion, by prioritizing collaboration, financial stability, and transparent oversight, the consortium is fostering a robust and sustainable system for protecting valuable government assets. While challenges remain, ongoing initiatives include data integration and financial disclosure requirements. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 43 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Box 4: A Case Study from the 2021 Mamuju Earthquake in West Sulawesi This report details the BMN insurance claims process following the earthquake disaster that struck Mamuju, West Sulawesi Province, in Indonesia, on January 15, 2021. The report highlights the efficiency of the claims process, the challenges encountered, and the valuable lessons learned for other countries implementing similar insurance programs. The claims process demonstrated a relatively quick turnaround. By July 21, 2021, the insurance company had completed the evaluation and approval process. Following an agreement to sell the building debris/scrap in August 2021, the claim payment of IDR 61.6 billion (US$ 3.95 million) was settled in April 2022. A key lesson learned from this claim was how the type of asset valuation declared to the insurers when the insured was commenced can impact the claim settlement amount. Historically, and as per regulation, the values attached to public assets in the SIMAN database reflected either depreciated book value, acquisition value, or fair value. None of these valuations reflects new replacement cost (i.e., the amount that it would cost at the time of loss to rebuild the building, subject to updated materials and labor costs). Sometimes the difference between a depreciated value and replacement value can be significant. In the instance of the buildings in Mamuju, the depreciated value was calculated to be only 44.972 percent of the total cost to rebuild as new. It also meant the impacted line ministry had only paid an insurance premium related to 44.972 percent of the replacement value. This triggered an insurance policy provision called ‘average’. Average meant that the insurer was only obliged to pay the same percentage (i.e., 44.972 percent) of the cost to rebuild. The remaining 55.028 percent of the rebuild cost had to be carried by the GoI. This BMN insurance case provides valuable lessons for other countries. It showed the importance of developing an asset valuation methodology that is fit for insurance purposes. If an insured’s expectation is that insurance will pay for rebuilding a destroyed asset, the value declared to the insurer(s) needs to be as close as possible to the rebuild cost. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 44 LESSON #7: THE IMPORTANCE OF ENHANCING THE CAPACITY AND CAPABILITY OF PUBLIC OFFICIALS This section outlines the MoF’s initiatives to enhance the skills of public officials in the field of ABMN. These initiatives resulted in significant progress thanks to a comprehensive approach that included evaluations, partnerships, and diverse training programs. The section examines the training needs identified, the partnerships forged, the training programs delivered, and the challenges encountered. In addition, it examines the benefits achieved and improvement plans. Identifying the Needs The groundwork for upskilling public officials began with the evaluation of the pilot phase of the ABMN program, which was conducted in 2019 and 2020. This evaluation served as a valuable tool to identify areas where knowledge gaps and skills deficiencies existed among the personnel involved in the program. By analyzing the implementation process, specific needs were identified, allowing for the development of targeted training and education programs. Partnerships Recognizing the importance of collaboration, the ABMN program partnered with key stakeholders to deliver quality training. The World Bank’s DRFI team provided invaluable expertise, while the Financial Education and Training Agency (Badan Pendidikan dan Pelatihan Keuangan, BPPK) and the Association of Indonesian Insurance Management Experts (Asosiasi Ahli Manajemen Asuransi Indonesia, AAMAI) provided specialized knowledge in financial education and insurance management. This combined expertise ensured a comprehensive and well-rounded approach to training public officials. Training Programs The ABMN program offered a variety of training and education programs tailored to meet identified needs. Public officials had access to: 1. The BPPK: ABMN e-Learning (Annex 1): This online platform provided a flexible and accessible learning environment that allowed public officials to learn at their own pace. 2. The BPPK: ABMN Advanced Class: This program provided a structured learning experience with facilitated sessions outside of the traditional classroom setting. 3. The DJKN: ABMN Policy Deep Dive Training: This specialized training focused on equipping public officials with the necessary skills to handle ABMN claims and ensure a smooth claims process. 4. The DJKN collaborated with the World Bank: ABMN Stress Test Exercises or Claims Training (Annex 2): This interactive program provided hands-on experience in claims handling and allowed officials to apply their knowledge in a simulated scenario. 5. The AAMAI: General Insurance Certificate Training: This program provided a broader foundation in insurance principles, further enhancing public officials’ understanding of risk-financing mechanisms. 6. Other Knowledge-Sharing Events: Several training events conducted in partnership with the DJKN and the World Bank. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 45 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Beyond Training Programs The capacity-building strategy went beyond formal training programs. Webinars were held for prospective MoF staff (Politeknik Keuangan Negara Sekolah Tinggi Akuntansi Negara [PKN-STAN] students) and DJKN staff in the DJKN Muda program. This proactive approach was aimed at fostering the creation of public officials well-versed in the insurance principles and risk financing. In addition, participation in the webinar coaching clinic program organized by the BPPK and the DJKN Secretariat promoted knowledge-sharing and continuous learning among trainers. Finally, regular annual seminars, held in collaboration with the KABMN, ensured ongoing engagement and training opportunities. Benefits The benefits of educating public officials were many. There was a significant increase in awareness of the ABMN program among public officials, and government ministries and agencies. Knowledge dissemination was successful, although further efforts are needed to ensure full understanding. Challenges and Solutions The program encountered some difficulties. In particular, frequent personnel changes within government ministries and agencies, as well as the DJKN offices, had the potential to disrupt the continuity of knowledge acquisition. To address this, the DJKN is establishing a network of “risk/insurance champions” in government ministries and agencies. Government officials, particularly line ministries as policyholders, are required to participate in e-learning and distance learning. After completing the training, they will be the champions within their own organizations. DJKN facilitates webinars to share their experiences and learn from each other. In addition, DJKN and BPPK staff created a regular training schedule for all learning programs, including e-learning and distance learning. This ensures that everyone has the knowledge they need, even when there are staff changes. Government of Indonesia (GoI) Actions Reflecting on the program’s evolution, it is clear that the scope of training could be further expanded. By offering a broader range of programs, the benefits of upskilling can be felt more widely. The following are some of the key lessons learned in developing risk financing skills training initiatives: 1. Identify needs: Conduct a thorough needs assessment to identify knowledge gaps and skills shortages. 2. Strategic partnerships: Work with relevant institutions such as training agencies, insurance bodies, and international organizations to leverage their expertise. 3. Comprehensive training: Develop a diverse range of training programs that include e-learning, classroom sessions, and interactive exercises. 4. Continuous learning: Foster a culture of continuous learning through mentoring programs. In conclusion, this initiative has resulted in a well-rounded upskilling approach for public officials involved in the ABMN program. By partnering with relevant institutions and offering a variety of training methods, knowledge about the ABMN program has grown significantly. Addressing challenges such as personnel turnover was achieved by establishing risk/ insurance champions, integrating training into annual INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 46 calendars, and ensuring consistent learning. The program will continue to focus on developing a deeper understanding of the claims-handling process since the claims process is complex and involves many steps. This can lead to faster claim processing and fewer errors. By continually identifying needs and collaborating effectively, this upskilling program can be further optimized to achieve its full potential. Box 5: World Bank’s Technical Assistance for the ABMN Program The World Bank has demonstrated a clear commitment to actively support the ABMN program through various activities. Key activities included knowledge-sharing and dissemination, program expansion, capacity building for government and DJKN officials, improvements to the SIMAN 2 database, and enabling an Enabling Environment and Progress Assessment (EEPA) Areas of collaboration included knowledge-sharing and advisory services for PMK 97/2019 on the draft legislation for the establishment and management of the ABMN program, which introduced the concept of disaster risk and insurance, and the calculation of insurance premiums. The Bank also facilitated the socialization of the program, supported its piloting in the early years, and conducted webinars on public property insurance. Most importantly, the Bank supported the MoF in scaling up the program. To strengthen institutional capacity, capacity-building initiatives were carried out for both government officials and MoF staff. The Bank and the MoF developed e-learning programs, policy deep dives, and stress testing exercises. In addition, the Bank contributed to the development of a manual and brochure on ABMN covering insurance claims protocols and processes, documentation templates and standards, and basic insurance concepts. Capacity-building initiatives also included study visits, exchange meetings, and executive education programs in various countries. In addition, the Bank provided guidance on the optimization of the SIMAN 2 database, which relates to the assessment and design of an end-to-end data system for DRFI and best practice data requirements for public assets and infrastructure, and facilitated the piloting of the EEPA framework. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 47 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY LESSON #8: PROMOTING THE PROGRAM (LINE MINISTRY BUY-IN AND PARTICIPATION) This section outlines the strategies employed by the MoF to encourage ministries and agencies to participate in the ABMN program. The section highlights the importance of the MoF having a clear mandate and showing strong championship. The section also analyzes the effectiveness of these strategies, considers stakeholder variations, explores incentive structures, and outlines plans for future participation development. It concludes by highlighting the benefits, challenges, and dependencies influencing program growth, and offers recommendations for future implementation. Strategies for Ministries and Agencies’ Participation The basis of the MoF approach was strong leadership commitment. A clear message from senior MoF leaders about the importance of the ABMN program resonated throughout the government ministry and agency hierarchy. However, this top-down approach was complemented by a critical element— personal engagement. The MoF officials responsible for the ABMN program did not just rely on broadcast messages, but actively reached out to individual government ministries and agencies, tailoring their approach to each entity’s specific needs and circumstances. This door-to-door strategy helped to build trust and enabled a deeper understanding of the concerns of government ministries and agencies, paving the way for successful ABMN program adoption. “Our strategy is to identify and engage with key individuals. We meet directly with the key person in each ministry and agency, which is typically the Head of Bureau, if possible, the Secretary General. In most cases, we visit each Secretary General one by one. In this instance, we speak with the Secretary General to explain the ABMN program.” – Encep Sudarwan, Director, Formulation of State Assets Policy (Perumusan Kebijakan Kekayaan Negara, PPKN), Directorate General State Assets (Direktorat Jenderal Kekayaan Negara, DJKN), Ministry of Finance of Indonesia The MoF used a variety of tools to raise awareness and educate government ministries and agencies regarding the ABMN program. Formal communication channels such as official letters and online outreach efforts laid the groundwork. Webinars and e-learning modules provided easily accessible information and training opportunities. By catering to different learning styles, the MoF ensured that knowledge would reach a wider audience within each ministry and agency. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 48 The Role of Incentives The Asset Management Index (IPA)5 assessment was employed and acted as a powerful motivator. By integrating insurance implementation as a key component of the IPA, the MoF directly linked responsible asset management to positive results for government ministries and agencies. High IPA scores translated into potential financial incentives, creating a tangible reward for active participation in the ABMN program. Tailoring Strategies to Stakeholders A one-size-fits-all approach would not be sufficient in this context. The MoF recognized that different government ministries and agencies had different capabilities and challenges. Smaller ministries with fewer task forces (referred to as Satker) and less rigid budgets readily embraced the ABMN program after receiving standard outreach and capacity development programs. However, larger government ministries and agencies with numerous task forces faced greater logistical hurdles in coordinating efforts across units and often had more stringent budget constraints. To address these complexities, the MoF took a more intensive approach with these units, emphasizing leadership involvement and in-depth socialization efforts. Financial incentives were not the only motivator that government ministries and agencies saw in the ABMN program. They also viewed broader benefits, such as an increased focus on disaster preparedness and asset protection within government ministries and agencies. This focus was in part due to the inclusion of ABMN in the IPA assessment. This fostered a culture of taking proactive measures to protect BMN. For example, fires in several uninsured ministry and agencies buildings exposed a lack of disaster preparedness. This experience highlighted the importance of public asset insurance. It served as a wake- up call, raising awareness of potential risks and the need for preventive measures. Participation Development and Growth Strategies Despite the success of the ABMN program, certain hurdles remain. Budgetary constraints, particularly Regulation PMK No. 63/2023 limiting the number of insured assets, pose a significant challenge. In addition, competing priorities within government ministries and agencies sometimes push BMN insurance lower down on the agenda. Personnel changes within ministries and agencies also require a robust knowledge-sharing mechanism to ensure continuity and ongoing program engagement. To mitigate these challenges, the MoF has remained proactive. Ongoing training for both ministries and agencies, and MoF supervisors, aims to equip them with the necessary expertise to navigate budgetary constraints and 5 The State Asset Management Performance Indicators (IPA), also known as the Asset Management Index, is a tool designed to measure the quality of asset management across all Ministries and Agencies. Developed by the Directorate of State Asset Policy Formulation at the Directorate General of State Asset Management (DJKN) – Ministry of Finance, the IPA has been in use since 2021. It supports good governance by providing a standardized assessment method. The IPA aims to foster the creation of effective, agile, and collaborative digital government governance. Its objectives include measuring the quality and performance of state asset management, implementing supervisory and control functions, and evaluating the implementation of bureaucratic reform in asset management. The basis for the IPA includes Government Regulation No. 27 of 2014 and Government Regulation No. 28 of 2020, which mandate the setting of performance indicators for state asset management, and Minister of Finance Regulation No. 207/PMK.06/2021, which stipulates that the IKPB (Performance Indicators of State Assets) is set by the Director General of State Assets on behalf of the Minister of Finance. Currently, the measurement of IPA for the year 2024 uses KMK Number 112/KMK.6/2024. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 49 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY prioritize asset management. Going forward, the ABMN program will include the development of a more advanced capacity development program, such as insurance e-learning, policy deep-dive training, stress testing exercise, and CGI/A2IK/A31K general insurance training. The KABMN will be required to hold seminars on an annual basis (revision of umbrella agreements) to maintain and increase the participation of government ministries and agencies in the ABMN program. Reflecting on the journey to date, the MoF recognizes the value of a high-volume approach to capacity development programs. Increasing the frequency and scope of training programs for both ministries and agencies and MoF supervisors has the potential to maximize program benefits. The MoF has a clear vision for the future of ABMN participation that will reduce the burden of full premium payments for government ministries and agencies. Meanwhile, Pooling Fund Bencana (PFB) integration will significantly increase program participation in the coming years. Government of Indonesia (GoI) Actions The DJKN’s experience highlights the importance of strong leadership commitment coupled with a personalized engagement strategy. Recognizing the different needs of different stakeholders and tailoring approaches accordingly is critical. Finally, aligning program goals with existing government initiatives, such as performance assessments, leverages existing structures for optimal results. By adopting a multifaceted approach that addresses individual needs and leverages incentives, governments can create a framework for successful government asset insurance programs, and foster a culture of responsible asset management and financial security. In conclusion, while a top-down approach with clear leadership buy-in is crucial, the program’s success lies in a multifaceted strategy. The program combines awareness campaigns with targeted capacity development programs, such as insurance e-learning, policy deep-dive training, stress test exercises, and Certification in General Insurance (CGI) training. This tailored approach addresses the diverse needs of different stakeholders, including budget constraints and knowledge gaps. By focusing on building long-term partnerships with key personnel in government ministries and agencies, the program ensures continued program growth and a more secure future for government assets. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 50 LESSON #9: FLEXIBILITY AND ADAPTABILITY (THE COVID-19 EXPERIENCE) This section provides an overview of the public asset insurance program managed by the MoF in the context of the COVID-19 pandemic. It gives an overview of the program’s status prior to the onset of the pandemic, the impact of the pandemic on the program, and the MoF’s flexible and adaptable response to maintain program effectiveness. Tracking the ABMN Program before the Pandemic Before the onset of the COVID-19 pandemic, the MoF provided direct support to government ministries and agencies through face-to-face assistance. This approach aimed to address the knowledge gap regarding the program’s functionalities and benefits. One challenge that the program faced was low awareness among its target audience (i.e., public officials). Impact of the COVID-19 Pandemic The onset of the COVID-19 pandemic in Indonesia in April 2020 presented two significant challenges to the program. 1. Shift to online assistance: The implementation of public activity restrictions (Pemberlakuan Pembatasan Kegiatan Masyarakat, PPKM) necessitated a shift from face-to-face support to online assistance. As such, the MoF had to modify its approach and identify alternative means of engaging with stakeholders. 2. Budgetary realignment: Government ministries and agencies were under pressure to reallocate budgets toward pandemic handling costs. This resulted in a challenge for them to secure funds for insurance premiums, which in turn impacted participation in the program. In addition, asset protection became less of a priority during a pandemic. The MoF’s rapid and strategic shift to online engagement and continuous program promotion resulted in increased participation despite budget constraints. The MoF addressed this concern by actively working with ministries and agencies to develop prioritized asset insurance plans, such as encouraging them to analyze risks, calculate rates, support meetings with the consortium, and assist in the procurement process. These plans focused on insuring critical assets, such as buildings that provide critical public services, are expensive to replace, or have been identified as disaster-prone. In addition, the program faced challenges, such as the lack of insurance literacy among government officials in each ministry and agency, and the reluctance of ministries and agencies to implement the program due to a lack of awareness. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 51 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY Stakeholder Engagement During the Pandemic Recognizing these challenges, the MoF implemented the following strategies for stakeholder engagement: 1. Online support and e-learning program: The MoF transitioned to an online support model. The MoF implemented a series of training programs (see Lesson #7) through e-learning platforms to educate public officials in government ministries and agencies. The objective was to increase awareness of the importance and benefits of public asset insurance. 2. ABMN handbooks: The MoF published dedicated ABMN handbooks (and brochures). These resources provided public officials in government ministries and agencies with a comprehensive understanding of BMN insurance implementation, ensuring consistency and clarity. These efforts were designed to bridge the insurance knowledge gap and facilitate program understanding, even with limited face-to-face interaction. Program Implementation during the Pandemic Despite the challenges, the ABMN program saw an increase in participation. In 2020, the first year of the pandemic, 13 government ministries and agencies opted into the program, exceeding the initial target of 10. This indicated a growing recognition of the necessity for BMN protection, even in the face of budgetary constraints. Government of Indonesia (GoI) Actions Based on the MoF’s experience, the following recommendations for managing similar programs during a disruptive event: 1. Self-assessment: It is essential to conduct a comprehensive self-assessment across all key pillars. The assessment should cover data readiness, institutional capabilities, program operations, and the state of the insurance market. By examining these pillars, it is possible to identify critical areas that require immediate, medium-term, and long-term focus. 2. Monitoring and evaluation: The use of established tools, such as an Enabling Environment and Progress Assessment (EEPA), allows for continuous program evaluation and progress monitoring. By analyzing data from these pillars, authorities can identify areas for improvement and ensure that the program remains effective in a dynamic environment. In conclusion, the global pandemic undoubtedly tested the adaptability of the public asset insurance program. The DJKN’s swift and strategic shift toward online engagement and continued program promotion led to a rise in participation despite budgetary constraints. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 52 Box 6: The Way Forward The MoF continues to strive to improve the quality of insurance policies for public assets (Barang Milik Negara, BMN) in Indonesia. Strong efforts to increase the number of insured objects and their distribution areas are certainly the main agenda. The implementation of risk data-based policymaking, supported by an integrated platform and information system, is expected to overcome the problem of the insured value of items that are currently under-insured. The MoF, as part of the Disaster Risk Financing and Insurance (DRFI) Project Management Unit (PMU) team, is also aligning the BMN insurance program with the implementation of the Pooling Fund Bencana (PFB) policy. On the other hand, the MoF is also aware that there are still various challenges arising from the global insurance market situation. Increased rates and prices in the foreign insurance industry will certainly have an impact on increasing prices/premium rates and conditions in the reinsurance market. To overcome this, the MoF, together with relevant stakeholders, continues to strive to develop strategies to maintain and increase the risk coverage capacity supported by domestic and foreign reinsurance markets. In this way, the sustainability of the BMN insurance policy can be maintained. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 53 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY ANNEX 1: E-LEARNING Objective: Improve knowledge and technical skills related to public asset insurance topics. Activity: This training will provide participants with: • General understanding of risk management; • General principles of insurance; • The insurance market; • General principles of public assets insurance; and • Public assets insurance policy. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY 54 ANNEX 2: STRESS TEST EXERCISE Objective: 1. Provide adequate information on potential risks and obstacles that may arise in each ministry/ agency at each stage of the claims process to help policy makers analyze and evaluate obstacles that may arise in the processing of BMN insurance claims. 2. Increase the understanding, ability, and willingness of each ministry/agency and relevant stakeholders to participate in the BMN insurance claims-handling process. 3. Obtain input and views from various parties regarding the stages of effective, optimal, and timely claims-handling. Activity: 1. This training will provide participants with a general understanding of BMN insurance, the stages of the claims process, and the calculation of claims (claim adjustment), as well as issues that limit the amount of compensation in the event of a dispute. 2. Participants will be asked to further understand the risks associated with BMN and the BMN insurance coverage in the facility. 3. Participants will also be provided with case studies related to the risks that occur, such as fire, earthquake, and flood, that are covered by the BMN insurance policy. While discussing the case studies, the participants will be guided through the real process and will be led to analyze and overcome various obstacles in the claims-handling process. The provisions are contained in the BMN insurance policy document. INDONESIA’S EXPERIENCE IN DESIGNING AND IMPLEMENTING 55 A PUBLIC ASSETS INSURANCE PROGRAM: A FIVE-YEAR JOURNEY REFERENCES Ardiyanto, N. 2024. Interview Notes on March 22, 2024. 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