National instability affects insurance companies' risk rates
National instability affects insurance companies' risk rates
Today, liquidity and sale problems are more difficult than
they were before the crisis. Both are impacts of the effects of
an economic crisis on Indonesia's insurance industry. Riots and
an unstable political climate have worsened the situation. The
Insurance Council of Indonesia's chairman, Munir Syamsudin, has
said: "To be honest, last year's riots put the insurance industry
in a difficult situation, especially with regard to insurance
covering loss."
Another obvious impact is the number of people surrendering
their life insurance to collect the premium. As for insurance
covering loss, the instability in this sector is aggravating the
risk rate of companies. "To insure means to take over other
people's risks. If an accident occurs, the insurance company will
be responsible for the financial aspects," explained Munir.
To propel the insurance business forward, he said, three
obstacles need to be overcome: 1) people's low insurance
awareness; 2) lack of capital, which affects a company's
progress; 3) the speculative attitude of insurance underwriters.
If these obstacles can be overcome, he said, then improvement in
services quality and accurate promotion campaigns need to be
carried out.
There are many joint venture or multinational insurance
companies in Indonesia, he said, with three-quarters of the
market already covered. This leaves only a quarter. However, he
said, every insurance company in Indonesia should prepare to
anticipate people's increased insurance needs for the future.
Furthermore, Munir said, government regulations on insurance
are quite good. But it would be better if the government was more
active and consistent in applying the regulations, he said.
"Currently, the application is not systematic." Why? He theorized
that it was because of a lack personnel to supervise insurance
companies.
Should there be better reform and synergy applied by both
sides -- the government and insurance companies -- we could all
be sure that the insurance industry would grow faster in the
future, he said.