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)