Insurance industry gaining greater market share
Insurance industry gaining greater market share
The Jakarta Post, Jakarta
By and large, the banks remain the dominant force in the
country's financial sector. Non-bank financial firms, however,
especially insurance firms, have begun to catch up, slowly
increasing their market share of the sector.
The banks have absorbed the largest portion of funds, although
the industry's share has been on a decline over the past three
years, from 92 percent in 2000, down to 91.64 percent in 2001,
and at 90.4 percent by the end of 2001, according to data
collected by Infobank magazine.
Per December last year, the financial sector had Rp 1,215
trillion (about US$144.6 billion) in total assets, a 3.2 percent
increase compared to the previous year.
On the other hand, the market shares of the non-bank financial
industries -- seen in their assets -- have been rising, with
insurance being the group's leader. It collected Rp 32.2 trillion
in assets (3 percent of market share) in 2000, Rp 36.4 trillion
(3.09 percent) in 2001 and Rp 41 trillion (3.4 percent) in 2002.
The improvement came even as the number of insurance firms
continued to shrink. The number of firms currently standing at
147, was 155 by the end of 2001.
Hotbonar Sinaga, the chairman of Indonesia's Insurance Council
(DAI), acknowledged the improvement, saying that it was
simultaneous with the rising confidence of both the public and
corporations in the industry.
"People are becoming more and more aware of the importance of
insurance, both life and general insurance," Hotbonar told The
Jakarta Post over the weekend, citing a consistent rise in the
gross premium of insurance companies.
The gross premium stood at around Rp 22.5 trillion in December
2002, significantly contributing to the industry's total assets.
Hotbonar also highlighted the challenges faced by the industry
in the future. Among others, the minimum capital requirement and
exploration of options for investment, in view of the declining
trend in the domestic interest rate.
At present, most of the insurance industry's investment
portfolio is in the form of bank time deposits, whose interest
rates are going down, Hotbonar added.
To avoid further losses, he suggested the industry turn its
investments to mutual funds and bonds, issued by the government
or A-rating companies.
Box
Top 5 Life Insurance Firms per 2002
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Assets Premium Market
Share
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AJB Bumiputera 1912 Rp 5.5 t Rp 2.1 t 18.4%
AIG Lippo Life Rp 3.5 t Rp 1.7 t 15.3%
As. Jiwasraya Rp 2.5 t Rp 0.9 t 8.5%
Indolife Pensiontama Rp 1.0 t Rp 0.8 t 7.1%
Manulife Indonesia Rp 2.0 t Rp 0.7 t 6.0%
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Top 5 General Insurance Firms, per 2002
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Assets Premium Market
Share
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Tugu Pratama Indonesia Rp 1.8 t Rp 1.6 t 14.1%
As. Jasa Indonesia Rp 1.0 t Rp 1.0 t 9.0%
As. Central Asia Rp 0.9 t Rp 0.7 t 6.2%
As. Astra Buana Rp 0.8 t Rp 0.6 t 5.6%
As. Sinar Mas Rp 0.5 t Rp 0.5 t 4.8%
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Source: Ministry of Finance