Employers Liability dan Workmen Compensation Insurance

In the various types of liability insurance that exist in Indonesia, Employers Liability and Workmen Compensation Insurance are commonly marketed among general insurance companies. One of the supporting factors why these two insurance products is marketed is because it is required in work contracts, especially in the Oil and Gas Industry.
Although it has been known for a long time in Indonesia, the application of these two types of insurance often create confusion. Therefore we try to provide a brief review of how these two types of insurance operate.
Employer Liability
Employer Liability Insurance provides compensation to the insured for lawsuits filed by employees (who are registered and employed by the insured) because the employee suffers bodily injury due to negligence committed by the insured in carrying out work where legally the insured is insured, then is obliged to pay the loss.
Some important points here are that only people or parties who have work contracts are covered by this EL policy, namely parties who have an “employer and worker” or “employer and employee” relationship. Bodily injuries and illnesses that arise must be the result of work. Bodily injuries suffered by workers while off duty are not categorized as the result of work. Claims that arise must be explained cause and effect related to the scope of work written in the schedule. Parties who also have employment contracts but act as independent contractors are not covered by EL insurance. Directors who work in a company that has a work contract with the company where they work will also be treated as workers so that if the insured's legal liability arises against the directors, it will be covered by the EL policy.
The premium for Employers Liability Insurance is obtained from the multiplication of the rate against the annual wages. The rates vary widely according to the nature and risk of the work being carried out.
 
Workmen Compensation
Workmen Compensation Insurance (WCI) provides compensation to workers employed by the insured in order to do their job. Compensation for workers is also provided for diseases that may arise due to work. The WCI also aims to get additional protection from mandatory government insurance (Jamsostek) so that workers get greater benefits. Benefits received are based on employee salaries. The WCI is said to be a unique insurance product, with a rather high frequency of claims, moderate severity and its application varies from country to country. When compared to Employers Liability Insurance, Workmen Compensation Insurance does not need to prove an error (or negligence) committed by the insured. Even so, the diseases covered by the WCI are diseases that are categorized as occupational diseases, which in this case are regulated in the Manpower Act No. 3 of 1992 regarding Workers' Social Security and Presidential Decree No. 22 of 1993 concerning Diseases Arising from Employment Relationships.
 
Diseases that fall into the category of occupational disease are as follows:
1.Pnemokoniosis caused by mineral dust that forms scar tissue (silicosis, anthracosilicosis, asbestosis) and silicotubercolosis, whose silicosis is the main factor causing disability or death.
2. Lung and respiratory disease (bronchopulmonary) caused by hard metal dust
3. Occupational asthma caused by sensitizing agents and known stimulants in the work process
4. Allergic alveolitis caused by external factors as a result of inhalation of organic dust
5. Diseases caused by beryllium, cadmium, phosphorus, chromium, manganese, arsenic, mercury, lead, fluorine, carbon disulfide or their toxic compounds
6. Diseases caused by halogen derivatives from toxic aliphatic or aromatic hydrocarbons
7. Diseases caused by nitroglycerin or other ester of citric acid
8. Diseases caused by alcohol, glycol or ketones
9. Diseases caused by gases or vapors that cause asphyxia or poisoning such as carbon monoxide, hydrogensianides, hydrogen sulfide, or their toxic derivatives, ammonia zinc, braso and nickel
10. Hearing disorders caused by noise.
11. Diseases caused by mechanical vibrations (disorders of muscles, tendons, joints, peripheral blood vessels or peripheral nerves)
12. Diseases caused by occupational exposure to the air which is more related
13. Diseases caused by electro magnetic radiation and ionizing radiation
14. Skin diseases (dermatosis) caused by physical, chemical or biological causes
15. Primary epithelioma skin cancer
16. Lung cancer or mesothelioma caused by asbestos
17. Infectious diseases caused by viruses, bacteria or parasites that are acquired in a job that has a special risk of contamination
18. Diseases caused by high or low temperature or radiation or high humidity
19. Diseases caused by other chemicals, including medicinal substances
 
In its practice in Indonesia, Workmen Compensation Insurance is generally required to operate after Jamsostek. This means that the claims calculated at the WCI will be deducted by the claims calculated by Jamsostek. What needs to be observed in this case is that if a claim has been paid by Jamsostek, then the WCI claim will not automatically be paid. This is because Jamsostek as social insurance has several products, including: Work Accident Insurance, Death Insurance and Old Age Security. The WCI will only operate if the Jamsostek claim from the Work Accident Insurance program operates.
 
Work Accident Insurance provides compensation and rehabilitation for workers who experience an accident when they start working until they return home, or suffer from illnesses due to work relations. Payment of dues every month depending on the type of work.
 
Unlike the work accident insurance, the Death Security program is paid to the workers' heirs of participants who died other than a work accident. The death insurance is in addition to the old age insurance, which is not yet optimal. While the latter, even though it is called the Old Day Insurance or Jaminan Hari Tua  (JHT), many claim that these funds are quite young. This program uses a savings system in which the contributions are borne by employers and workers. The value to be obtained is the contribution collected plus the results of development (investment). The bigger the salary, the higher the contribution so that the greater the funds that will be received by workers. JHT can be disbursed if the worker meets the following requirements:
 
• Reached 55 years of age.
• Experience a permanent total disability so that they can no longer work or die.
• Experience termination of employment (PHK) after being a participant for at least 5 years.
• Travel abroad and not come back, or become a PNS/ TNI.
 
In the United States, Employers Liability insurance and Workmen Compensation Insurance are sold as a single policy. Of course, it has two kinds of coverage, namely EL and WCI. Because confusion often arises about how the application of these two products in Indonesia, it might be better if these two insurance products in Indonesia are sold under one policy as in the United States.
 
Regarding the premium calculation method, the premium for WCI is obtained by multiplying the rate by the annual payroll or annual wages. Ideally, the premium is paid to the insurer using a Minimum Deposit (MinDep) mechanism based on an estimated annual wageroll and then a final adjustment is made at the end of the policy based on the actual wageroll.