Despite the fact that more tha 250,000 flood victims have been evacuated since the crisis started approximately 2 weeks ago, the Malaysian Government has steadfastly refused to declare a “state of emergency” to mobilise the entire machinery at its disposal to manage, mitigate and resolve the natural disaster.
The Deputy Prime Minister, Tan Sri Muhyiddin Yassin on Christmas Day had opined that the criteria for a “state of emergency” have not been met, including “the total breakdown of water and electricity supply”. He also argued that the number of evacuees have not reached a critical level – “we have to consider the total number of people being evacuated, is it in hundreds of thousands?”
Since 5 days ago, the number of evacuees has multiplied from 90,000 to more than 250,000. Our field trips to various parts of the flood-affected areas have also found that electricity and water supply have been severely interrupted. One of our relief workers reported that an “uncle” telling him that he had to eat instant noodles “cooked” in cold rainwater.
Dato’ Seri Najib Razak on 27th December gave the excuse that “if the government announces an emergency, the implications that will arise include the insurance companies being absolved from paying compensation…and compensation arising from damages to property and vehicles is enormous.
“That’s why if we declare (an emergency), this means it includes the ‘force majeure’ category, and insurance companies need not pay compensation (in this case),” he said.
Given the oddity of the excuse, I’ve taken the trouble to review the typical property and vehicle insurance agreements of several insurance companies and found absolutely no trace of any exclusion as a result of the Government’s declaration of “state of emergency”.
Vehicle Insurance
In the Allianz agreement, the vehicle insurance will not cover “if any loss, damage or liability is caused by invasion, war (whether war be declared or not), warlike operation, acts of
foreign enemies, hostilities, civil war, acts of terrorism, strike, riot, civil commotion, mutiny, rebellion, revolution, insurrection, military or usurped power or by any direct or indirect
consequences of any of the said occurrences”.
The same agreement also stated that the vehicle damages will not be indemnified, “if any loss, damage or liability is directly or indirectly caused by or contributed to by or arising from flood, typhoon, hurricane, storm, tempest, volcanic eruption, earthquake, landslide, landslip, subsidence or sinking of the soil/earth or other convulsion of nature is involved.”
Hence given the above exclusion, it means that vehicles damaged by the massive flood would not be indemnified anyway (unless additional flood cover was purchased) regardless of whether the state of emergency is declared!
Property Insurance
There is better news for damages to property caused by flood – because such damages are specifically indemnified.
The exclusion terms were however not too different. The insurance company would not pay in the event of “war, invasion, act of foreign enemy, hostilities, or warlike operations (whether war be declared or not), civil war; Mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped power, martial law or state of siege or any of the events or causes which determine the proclamation or maintenance of martial law or state of siege”.
Under such circumstance, if “martial law” was declared, then perhaps the insurance is invalidated. However, a ‘state of emergency’ is certainly completely different from ‘martial law’.
Property insurance is also invalidated if any destruction is “caused by cessation of work, or by confiscation, commandeering, requisition or destruction of or damage to the property by order of the Government”. Surely the Government is not seeking to declare a state of emergency to “destroy” the rakyat’s properties?
The terms of the insurance agreements are practically the same in those of other insurance companies including AIG, AIA, Kurnia, Takaful and Etiqa.
The question hence arise, was the Prime Minister misled by his advisors or even the Attorney-General? Or did Dato’ Seri Najib Razak want to avoid at all cost a declaration of emergency for reasons best known to himself, and use the “insurance” argument as an excuse to justify his decision.
Given the above information, and in the light of a quarter of a million victims affected by the crisis, we call upon the Prime Minister to seriously consider a state of emergency to instil greater urgency and effort by all Government departments and machinery to alleviate the sufferings of the people and minimize number of victims affected by the floods.