Local firms threatened by overseas insurers

JAKARTA (JP): Foreign investors have gained a foothold in the country's insurance market over the past several years, threatening local firms, a survey revealed on Wednesday.

The survey, conducted by Infobank financial magazine, said that foreign insurance firms -- which have been allowed to hold a 100 percent stake in domestic insurance operations -- have recorded a significant growth in total gross premiums, especially in the life insurance sector.

The survey revealed that out of the total 104 foreign insurance firms, 23 enjoyed a hefty 32.8 percent growth in 2000 gross premiums to Rp 1.93 trillion (US$218 million) from Rp 1.69 trillion in 1999.

On the other hand, local firms suffered a decline in gross premiums from Rp 4.2 trillion to Rp 3.9 trillion, Infobank said.

"Foreign insurance firms controlled up to 45.09 percent of the domestic life insurance market," the survey said, adding that out of the total 60 life insurance firms, 23 were owned by foreigners.

Infobank also rated the insurance firms. The top 10 firms are Manulife Insurance, Central Asia Raya, Eka Life, Allstate, AIA Indonesia, Bumiputera John Hancock, Askrida, Indatamporok Life, Panin Life and Rama Life.

The firms were appraised on their financial ratio and business growth.

Meanwhile, Infobank chief editor Eko B. Supriyanto said that the domestic life insurance industry suffered Rp 59.4 billion in losses in 2000, compared to Rp 84.3 trillion in losses in the previous year.

In contrast, the general insurance industry booked a profit of Rp 1.02 trillion last year.

Eko urged the government to close troubled insurance firms in a bid to help strengthen the insurance sector.

He said that the lack of government supervision had contributed to the deterioration of the insurance industry.(11)