Business Competition Supervisory Commission (KPPU) has completed the scrutiny over alleged unfair business practices, such as price fixing agreement in the determination of flood risk insurance premiums by the General Insurance Association of Indonesia (AAUI).

Business Competition Supervisory Commission (KPPU) has completed the scrutiny over alleged unfair business practices, such as price fixing agreement in the determination of flood risk insurance premiums by the General Insurance Association of Indonesia (AAUI).
In supervision, the Commission get the facts enactment SK General Insurance Association of Indonesia, Decree No. 02/AAUI/2013 dated February 14, 2013 concerning the renewal premium Rate Guidelines and Flood Zone A purse Flood Risk Insurance (SK 02). Decree 02 was declared effective on March 14, 2013 to replace Decree No.. 505/AAUI/2005 (SK 505).
SK assisted in the preparation of PT Indonesia Insurance MAIPRAK dedicated to property insurance is arranged several changes: first, about the zone (flood risk). SK 02 is part of the deal of efforts in association potentially violate the prohibition of article 5 of Law No.5/1999 this.
The Commission requested AAUI to cancel. Because we see the potential of setting premiums cartels, "said Syarkawi Rauf, the Commission's Commissioner, Sunday (31/03/2013) in an email to Reuters.
"Moreover, no amount is smaller but even more expensive," he said. In this regard, the Commission has asked the association to cancel the implementation of Decree 02 and will supervise its implementation.
In SK 505, flood zone is divided into three areas based on the industrial, conventional and domestic. Now zones are distinguished by the level of risk: the first zone of low areas that never flooded or been flooded with a height of 30 cm. Premium rates are 0.045 percent (of the sum insured).
Second, the moderate zone (intermediate) which is the area had flooded to a depth of 30 cm-60 cm. the amount of the premium .170 (of coverage). Third, the high zone of the area that had flooded with a height of 60 cm with a rate premium of 0.52 per cent (of sum insured).
In general, the range is from 0.045 to 0.5 percent premium rates of coverage higher than SK 505 is only 0.015 to 0.07 per cent of the sum insured. In addition, the Decree 02 was set additional tariffs loading rate, where buildings constructed for the class and have a basement dikenakanloading rate specified appraiser.
Commission's view that pricing between business on the selling price of goods or services it sells is part of a price fixing cartel which is prohibited under Article 5 of Law No. 5/1999: "Entrepreneurs are prohibited from making agreements with businesses competitors to fix the price of the goods and or services to be paid by the consumer or customer on the same relevant market. "
As part of this oversight, the Commission this week, on Wednesday (04/03/2013) Chairman AAUI scheduled call to request a report on this pelaksanaanperintah. Behavioral changes such as the implementation of Decree 02 cancellations this certainly does not diminish the authority of the Commission, to oversee the implementation of the cancellation to prevent a repeat of this flood risk tariff by the business in the future.
Furthermore, in the context of the policy, the Commission considers that the insurance industry regulation including flood risk premium tariffs, it should not be done by the business it should be regulated and determined by the insurance regulator in this case the Financial Services Authority (OJK).
"In this month, the Commission will send suggestions to the OJK policy considerations to develop regulations related to flood insurance premium rates," said Saidah Sakwan, Vice Chairman of the Commission.