The Jakarta Post, Jakarta | Business | Wed, March 26 2014, 11:46 AM
The country’s insurance companies need to improve their competitiveness ahead of the implementation of the ASEAN Economic Community (AEC) in 2015; otherwise, it will be difficult for them to win a sufficient market share, according to an Indonesian Chamber of Commerce and Industry (Kadin) official.
Rosan P. Roeslani, Kadin’s deputy chairman for banking and finance, said the introduction of the AEC offered not only a challenge but also an opportunity for the country’s insurance industry.
“This is an opportunity for Indonesian insurance companies to expand to other ASEAN countries, to play in the regional field,” Rosan said during a seminar in Jakarta on Tuesday.
Before expanding to other countries, however, he said the industry still had a long way to go at home.
Meanwhile, the Financial Services Authority’s (OJK) deputy commissioner for the supervision of the nonbanking financial industry, Dumoly Pardede, said the insurance companies faced a number of challenges.
“Seventy percent of the complaints that we [OJK] get are from insurance customers who have problems with claims management,” Dumoly said, adding that some insurance companies still lacked good customer service.
Moreover, he added, the number of actuaries, underwriters and other support workers was still low.
“These factors have led to low insurance penetration and density in Indonesia,” he said. Given this situation, Dumoly said some people chose to purchase insurance products in other countries, such as Singapore, while others viewed insurance as unimportant.
Although, generally, Indonesia’s insurance industry has seen growth in terms of assets and premiums, its penetration and density rate is still low compared to other ASEAN countries including Malaysia, Thailand and Singapore.
Insurance penetration is calculated as the ratio of the percentage of total insurance premiums, while insurance density is calculated by the amount of premiums per capita.
The Finance Ministry’s special staff member for finance services and capital market policies and regulations, Isa Rachmatarwata, said the nation’s insurance industry needed to be able to withstand the influx of foreign insurance workers once the AEC was launched.
“In order to achieve this, there must be a policy that can increase the capabilities among domestic insurance workers,” Isa said. He added that although the government had introduced several programs, such as the OJK’s 1,000 actuaries program, the results had yet to be seen.
Firdaus Djaelani, the OJK’s commissioner for the nonbanking financial industry, acknowledged that the insurance industry still lacked a skilled workforce.
“The human resources are not fully prepared to face the AEC,” he said.
Indonesian Insurance Council (DAI) chairman Hendrisman Rahim said ASEAN’s goals were ambitious but that Indonesia was not ready for the region’s economic integration.
Indonesians account for 40 percent of the entire ASEAN population. However, insurance penetration was still low and capacity among the country’s insurers remained in doubt, according to Hendrisman. Instead, Indonesia would become the main target of Singaporean and Malaysian insurance companies, he added.
“If the AEC were implemented in 2020, as the initial plan had suggested, Indonesia would be well-prepared,” he said.
According to PT Prudential Indonesia president director William Kuan, even with economic integration, expanding to other countries would not be easy.
“If a company expands [its business] to another country, it must consider many things, including design and target audience, before it offers insurance products,” Kuan said. (dwa)
Sumber: The Jakarta Post