Insurance brokers demand 'equal treatment'

Insurance brokers demand 'equal treatment'

JAKARTA (JP): Many insurance companies in Indonesia are
operating with limited capital which restricts their ability to
expand, Chairman of the Association of Indonesian Insurance
Brokers (ABAI) Rubianto said.

If the government is capable of extending Rp 18 trillion
($2.25 billion) for the recapitalization of commercial banks,
then the insurance industry should be entitled to similar
assistance, Rubianto was quoted by Antara as saying.

"It's not fair that the insurance industry does not get the
same treatment from the government," he said.

"Both banks and insurance companies collect funds from the
public which they then channel to the business sector. They both
provide job opportunities for the people," he said.

The government announced this week that the cost of
recapitalization of the banking sector would amount to Rp 34
trillion. Of this sum Rp 18 trillion would come from the
government's 1999/2000 budget and the rest from the proceeds of
the sales of assets of the banks under the program.

The restructuring of the banking sector is a central part of
the government's economic recovery program.

Rubianto said most local insurance companies operate with
limited capital thus they cannot cover risks above Rp 100
million.

"For higher risks they have to deal with a reinsurance firm
abroad," he said, adding: "We need a capital injection so we
don't have to reinsure abroad. The government could help us on
this."

Rubianto also demanded that the government lower the tax base
for insurance premiums to a level more consistent with current
business conditions.

The government taxes insurance companies on the assumption
that their profits reach 60 percent of the total premium.

"The 60 percent tax base should be lowered to 29 percent
because in practice insurance companies only get a margin of
between 30 and 40 percent," he said. (02)