Three foreign insurers will operate in RI

Three foreign insurers will operate in RI

JAKARTA (JP): The government will soon issue licenses to three
foreign insurance companies -- Principle Life, Cigna Life, both
of the United States, and QEB of Australia -- to operate in the
country, says an executive of the Ministry of Finance.

Shopar L. Toruan, the ministry's director insurance
department, said here Saturday that the three companies will
operate in cooperation with domestic partners.

Principle Life has formed a joint venture with E.G. Lita,
Cigna Life with Niaga Life and QEB, an Australian loss insurance
firm, with Pool Asuransi, he said.

"We hope the three foreign companies are willing to transfer
their insurance know-how to their local partners," he told
reporters in a press briefing held within the framework of the
opening of a meeting of the ASEAN Insurance Council (AIC) here
today.

There are 148 insurance companies now operating in the
country, comprising of 46 life insurance firms, 98 loss insurers
and four reinsurers. Out of the companies, 17 are foreign joint
ventures -- four operating in life insurance and 13 in loss
insurance.

Shopar said here the presence of foreign insurers in the
country is still needed as the financial capability of the local
companies is still relatively low.

"Around 80 percent of the country's insurance coverage is
reinsured to foreign firms. It indicates the weakness of
financial capability in the insurance industry," he said.

The growth of both life and non-life insurance companies in
the country remains low as compared to those in other ASEAN
countries.

The gross premium incomes of the insurance industry rose by 24
percent to Rp 3.29 trillion (US$1.56 million) in 1992 from Rp
2.65 trillion in 1991. The ratio between the premium revenues to
the country's gross domestic products (GDP) was also still
relatively low, at 1.29 percent in 1992 and 1.17 percent in 1991
despite the high growth in the premium revenues.

"Only seven percent of the country's 187 million people have
been so far covered by the insurance industry," he said.

Shopar said that Indonesia still faces a number of handicaps
in improving people's awareness about the advantage of insurance
due to the lack of promotion drives made by insurance companies
and a number of reported frauds taking place within the industry.

He said the growing middle class is a potential market for
insurance companies but many of them are still afraid of being
cheated.

AIC Meeting

Willy Wiguna, the chairman of the organizing committee of the
meeting of AIC, said that around 50 executives of the council's
members will participate in the two-day meeting to be opened in
Sahid Jaya hotel today.

The meeting will be the 21st annual gathering of the council,
which groups insurance companies in member countries of the
Association of Southeast Asian Nations (ASEAN), including Brunei,
Indonesia, Malaysia, the Philippines, Singapore and Thailand. The
previous meeting was held in Brunei.

Willy said that the committee will propose a number of
important issues to be discussed in the meeting, mostly relating
to the latest development of the Asian economy such as the phase
of the liberalization of trade within the ASEAN countries, the
development in the insurance market in China and the
liberalization of the Indian insurance market.

In addition to the agenda, the council will also hold a joint
dialog with ASEAN Insurance Commissioners to discuss the proposal
allowing ASEAN insurance companies to invest five percent of
surplus funds in any of the association's member countries. (hen)