Importance of insurance underlined

Recent events have brought home the prudence of insurance as a protection against unforeseen events which may be lurking in the future.

The May riots and ensuing fires which laid waste to much of the capital of Jakarta have caused huge material losses. A far- thinking few may be covered for their losses and may be quickly able to restore some of the normalcy to their lives.

But those lacking insurance coverage will, unfortunately, have to go it alone in picking up the pieces and putting their businesses back on the road to recovery.

Although it is a relative newcomer to Indonesia, insurance has a long history throughout the world, dating back in a very simple form to ancient Babylon.

It came into its own in the modern era with the establishment of fire insurance by Nicholas Barbon in London in 1666, following the "Great Fire" which razed the English capital. Within a few years, insurance had grown into a large, diversified business with comprehensive services available.

Insurance companies play a vital role in the economies of many nations. They contribute to a country's economic stability by compensating individuals and businesses for financial losses that could otherwise force them into bankruptcy.

By insuring loans and helping new businesses open their doors, insurance firms help increase the production of goods and services. They also employ many people and pay huge amounts in taxes.

In Indonesia, awareness of the benefits of insurance remains relatively low among the general population. Insurance firms have their work cut out for them in getting the word out about how insurance is a long-term investment and can be a vital lifeline when trouble strikes.

The focus of the message is that insurance holders have a sense of security. They can own property, vehicles, operate businesses and engage in many other activities safe in the knowledge that insurance is covering them for most types of loss and risk.

People can reduce the risks of starting a new business or acquiring property by buying insurance.

It also means facing realities -- when the undesired does occur, insurance claims may prove to be the difference between recovery and going belly-up.

Getting this across to Indonesians is essential because the country's population of more than 202 million presents an ideal insurance market waiting to be tapped, despite the economic downturn of the past year.

Indonesia's insurance business dates back to the Dutch colonial era with the founding of Bumiputra, offering life insurance, in 1912.

Following independence, insurance consciousness continued to grow, although gains were gradual and dependent on the economic situation.

The public's knowledge of insurance, however, remained limited, with most assuming the only type available was life insurance policies.

Indonesia's insurance sector began to take off during the current decade, with increased consumer spending power, heightened recognition of advantages and the growing presence of joint-venture firms in the nation.

These launched intensive campaigns aimed at improving the public's knowledge of the various types of insurance available. This effort was important in assuring the development of the sector and expanding public knowledge of how insurance could be a friend in a time of need.

Great strides were made, particularly in the mid-1980s through to the middle of this decade, in reaching out to the public and increasing their participation.

In 1976, there were 1.3 million life insurance policies in the country but in 1985, the total had increased to 2.7 million. However, this represented a mere 1.68 percent of the total population.

Today, the market has a variety of policies available to serve diverse needs of customers from all walks of life and incomes.

These include scholarship insurance, multiform insurance, haj insurance, old age insurance, pension plans, health insurance, insurance for members of the Armed Forces and insurance for civil servants.

Opportunities

The bountiful opportunities available in the Indonesian market have not been lost on foreign insurance firms.

Many have set up operations in the country in an effort to educate the Indonesian public about the value of insurance in assuring a better future.

These firms have come from developed insurance markets in such countries as the United States, Britain and Australia.

A recent new entry is PT Asuransi AXA Indonesia, which was incorporated in 1996. It is part of AXA, which has more than 180 years' experience and is one of the largest insurance groups in the world.

With assets in excess of US$500 billion and annual revenues of $60 billion, the group currently has operations in more than 50 countries and employs more than 130,000 people, including 12,000 in the Asian region.

PT Asuransi AXA Indonesia offers insurance to meet a broad range of commercial and personal requirements, including property, engineering, marine, personal accident or health, liability, motor, home and content and travel accident.