Insurance deficit predicted to double<\/p>\n
JAKARTA (JP): This year's current account insurance services
\ndeficit could double from last year to about Rp 1.5 trillion
\n(US$646.55 million), an insurance analyst said yesterday.<\/p>\n
The Indonesian Council of Insurance's chairman, B. Munir
\nSjamsoeddin, said last year's deficit in insurance services
\namounted to Rp 826.15 billion, up 80.9 percent on 1994.<\/p>\n
Munir said the insurance deficit had increased steadily in the
\nlast six years. The deficit in 1990 was Rp 211.34 billion, rising
\nto Rp 282.5 billion in 1991, to Rp 353.85 billion in 1992, to Rp
\n398.74 billion in 1993, to Rp 456.70 billion in 1994 and to Rp
\n826.15 billion in 1995.<\/p>\n
Indonesian insurance firms paid about Rp 1.71 trillion in
\npremiums, commissions and claims last year to foreign insurance
\ncompanies. And Indonesian firms made only Rp 882.27 billion from
\nthem, Munir told a seminar on maximizing financial services
\nbefore the year 2003,<\/p>\n
He said the deficit was increasing because Indonesian
\ninsurance was inefficient and could not compete against foreign
\ninsurance.<\/p>\n
Local insurance companies' net retention of insurance was
\nsmall because they did not have much capital. They were also
\nunfamiliar with co-insurance schemes which could reduce their
\nrisks, he said.<\/p>\n
Most local insurance firms preferred to act as insurance
\nbrokers rather than insurance underwriters so local underwriting
\nrevenue was small.<\/p>\n
He said the 96 local loss insurance firms' premiums totaled
\nonly $1.2 billion in 1994: \"Japan with 54 loss insurance firms
\ngot premium revenue of $129 billion in 1994, while Malaysia with
\nonly 40 loss insurance companies was able to get $1.4 billion.<\/p>\n
\"We see a worse condition in local life insurance. The 50 life
\ninsurance companies here managed to get a premium revenue of only
\n$0.8 billion in 1994. Japan with 30 life insurance firms was able
\nto get $477 billion and Malaysia with only five gained $1.4
\nbillion,\" he said.<\/p>\n
\"This simple comparison shows us that our insurance firms are
\ninefficient. We have about six years to improve before we must
\nface open competition in the year 2003, when the Association of
\nSoutheast Asian Nations (ASEAN) will start implementing AFTA
\n(ASEAN Free Trade Area),\" he said.<\/p>\n
Munir, also the president of state-owned PT Reasuransi
\nIndonesia, said Indonesia should apply the Malaysian method which
\nprotected and regulated insurance services.<\/p>\n
He said insurance firms in Malaysia were only allowed to use
\nforeign reinsurance if local capacity had been exceeded.<\/p>\n
\"With such a regulation I think our local insurance firms
\nwould not necessarily compete head on with foreign ones,\" he
\nsaid. (bnt)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/insurance-deficit-predicted-to-double-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}