Local companies uninterseted in insuring satellites
Local companies uninterseted in insuring satellites
JAKARTA (JP): Domestic insurance firms are not interested in
dealing with satellite insurance because of a lack of regulations
and local satellite launchings, the president of state-owned
insurance firm PT Reasuransi Umum Indonesia said yesterday.
Munir Sjamsoeddin told a seminar on satellite insurance here
yesterday that local underwriters also had poor knowledge about
satellite insurance.
"That's why it will be hard to expect strong national capacity
in satellite insurance," he noted.
The seminar, discussing issues on "developing the national
capacity in satellite insurance in facing the globalization era"
was organized by private telecommunications operator PT Satelit
Palapa Indonesia (Satelindo) and PT Bimantara Graha Insurance
Brokers.
Munir, who is also chairman of the Indonesian Insurance
Council, said recently that the deficit in insurance services, as
part of the current account in the balance of payments, could
double to about Rp 1.5 trillion (US$635 million) in 1996 from Rp
826.15 billion in 1995.
The insurance deficit has increased steadily in the last six
years. The deficit in 1990 was Rp 211.34 billion, rising to Rp
282.5 billion in 1991, to Rp 353.85 billion in 1992, to Rp 398.74
billion in 1993 and to Rp 456.70 billion in 1994.
According to Munir, the losses were caused mainly by
inefficiency and lack of competitiveness on the part of
Indonesian insurance firms against foreign competitors.
Local insurance companies' net retention of insurance was
small because they did not have much capital. They were also
unfamiliar with co-insurance schemes which could reduce risks.
Most local insurance firms preferred to act as insurance brokers
rather than insurance underwriters so local underwriting revenue
was small, he added.
Munir said that leading insurance firms like Bimantara Graha
Insurance Brokers which had links with the international market
could improve the national capacity in satellite insurance by
insuring not just satellites owned by Indonesian operators but
also those owned by other nations.
He said national insurance capacity could also be expanded to
cover other fields like aircraft, power plants and natural gas
exploration which all involve high risks.
Meanwhile, Reasuransi Umum Indonesia's director Frans Y.
Sahusilawane said that based on the 1995 Insurance Business
Report there were 98 insurance firms, 68 insurance brokers, four
reinsurance firms and 10 reinsurance brokers in Indonesia.
He said their total gross premium incomes reached Rp 3.27
trillion, their local market's retained premiums Rp 1.46
trillion, outward reinsurance premiums abroad Rp 1.67 trillion
and inward reinsurance premiums from abroad Rp 60 billion.
Sahusilawane estimated the real aggregate net retention of
local companies at between Rp 50 billion to Rp 55 billion, or an
average level of Rp 50 billion.
"With this level of retention, we can not expect to retain a
big portion of a satellite that is worth $150 million or an LNG
plant worth $1 billion," he added.
Indonesia, which started its domestic satellite business in
1976, will see a number of spacecraft launchings within the next
few years, including the Garuda-1 of PT ACeS, Indostar-1 of PT
Malicak, Palapa-D1 of Satelindo and PT Telkom and the M2A
satellite of PT Pasifik Satelit Nusantara.
PT Jasindo insured the Palapa-C1 and the Palapa-C2 satellites
currently operated by Satelindo for about $165 million each from
liftoff to the end of the satellite's life span. In the deal,
Jasindo cooperated with PT Citra International Underwriter and 17
other domestic and foreign insurance companies.
According to George A. Tadler of Hughes Space and
Communications, about 80 commercial geostationary satellites will
be on order over the next three years with a total value of about
$15 billion in sales. "But orders are still coming in," he said.
He said the total demand for launches in the next three years
was predicted to reach over 110, or about 36 satellites per year.
(icn)