Tue, 02 Aug 1994

Govt to improve climate for insurance business

JAKARTA (JP): The government is committed to improving the climate for the insurance business in the country in face of liberalization under the ASEAN Free Trade Area (AFTA) forum.

Director General for Financial Institutes of the Ministry of Finance Bambang Subiyanto told reporters after opening the 21st assembly of the ASEAN Insurance Council (AIC) at Sahid Jaya hotel yesterday that the government, in cooperation with the Indonesian Association of the Insurance Companies (DAI), is now formulating various steps to develop the insurance industry.

He said the government will also take strict measures against illegal practices in the industry," he said.

He explained that a good climate is important for promoting the development of the insurance industry, considering that the ratio of Indonesia's policy holders against the population is still very low at only seven percent.

The ratio was only three percent five years ago, he said.

Bambang delivered a key speech yesterday at the AIC assembly, which was attended by around 40 executives of insurance associations from five of the six members of the Association of Southeast Asian Nations (ASEAN) -- Malaysia, Singapore, the Philippines, Thailand and Indonesia. Brunei's representatives were absent at the assembly.

The meeting was intended to exchange information and experience related to the insurance business and to seek a standardization in insurance practices among ASEAN countries to support the implementation of the AFTA scheme.

AFTA, which has been implemented since early this year, aims at gradually liberalizing trade among ASEAN member countries within 10 years.


Sophar Lumban Toruan, the finance ministry's director for the insurance industry, meanwhile cautioned that the progress of Indonesia's insurance business is still left far behind other countries in the region.

"Companies involved in the insurance industry, therefore, should be responsible for educating the public on advantages of the business by providing consulting and guidance on insurance," he said, adding that most of Indonesian people are not accustomed to planning their future life.

He said that the ministry is now designing a new life insurance facility which is very modest in operation, thereby encouraging low income to use insurance services.

AIC's chairman, Armando C. Trinidad, said that many people seem to consider insurance a non-profit business. He therefore suggested that the industry strengthen its information campaign.

He pointed out that the ratio of policy holders against population in the Philippines is around 40 percent.

An informed source said the policy holder ratio is 35 percent in Singapore, 20 percent in Malaysia and 30 percent in Thailand. (fhp)