AAUI Studies On Typhoon Coverage
	Indonesia: Insurance Industry Eyes High Growth
	Indonesia: Insurance Broker Eyes On Power Plant Insurance
	Indonesia: Plans Mulled for New Financial Industry Regulator
	Pure Premium of Property Insurance Urgent
	Catastrophe Losses Have No Impact on April Renewals
	Insurance for Geothermal Power Plant Discussed
	Indonesian Premium of Oil and Gas Insurance Urged to Change
	Insurance Claims Stand at IDR54,39 Trillion
	Indonesian Insurers Need To be Prepared To Handle Claims from Urban Quakes
	Insurers' Must Raise Cat Rates in Indonesia
	Insurance Market Recovers
	Non-life business to rebound in 2010

AAUI Studies On Typhoon Coverage
The Indonesian General Insurance Association (AAUI) studies the possible special insurance for typhoon following the escalating damages caused by the natural disaster. Chairman of AAUI Kornelius Simanjuntak said the company considered the need for special insurance product to help ease the customers to buy special insurance policy for the typhoon risk coverage. The specification here is important so as to have more complete claims due to the fact that some cases of typhoon failed to meet the coverage criteria as stipulated by property insurance policy. "Recently typhoon frequently happens with significant death tolls and damages. We consider it is necessary to study the formation of special insurance policy for typhoon," he said last week. The special risk of typhoon coverage is based on the experiences of other special insurance products providing more benefits customers such as terrorism insurance.
Bisnis Indonesia, 05 July 2010  

Indonesia: Insurance Industry Eyes High Growth
The insurance industry is forecasting healthy growth this year but says low income levels and a lack of education resulting in widespread public skepticism about insurance are preventing even greater gains. The Indonesian Life Insurance Association (AAJI) said it expected revenue for the life and health insurance industry to grow by up to 50 percent to Rp 120 trillion ($13.2 billion), compared with 76 percent growth last year. The Indonesian General Insurance Association (AAUI) has forecast 15 percent to 20 percent revenue growth to Rp 27 trillion for all other forms of insurance apart from life insurance, significantly outpacing last year's 5.7 percent growth. AAUI head Kornelius Simanjuntak said growth in automotive, property and infrastructure insurance was boosting the general insurance expansion. "Indonesia has good economic fundamentals and as long as the country can achieve the government's goal of 5.7 percent growth this year, we're optimistic that the industry can grow between 15 and 20 percent," Kornelius said.
The Jakarta Globe, 1 July 2010  

Indonesia: Insurance Broker Eyes On Power Plant Insurance
Insurance and reinsurance brokers aim at power plant sector risk coverage following the mounting potential of the 10,000 megawatt (MW) power plant project realization. Secretary general of the Indonesia Association of Insurance (APARI) Bambang Suseno, said the government added the amount of power plant capacity in the past several years and increased the insurance objects. "Insurance object here could range from infrastructure development process up to power production. The potential risk management of power plant in Indonesia increases this year following the realization of 10,000 MW power project," he said on the sidelines of seminar on Power Plant Risk Management yesterday. However, Bambang cannot mention the insurance premium due to the various power plant characteristic. Besides, water-based machine has lower risk than the other machinery. The sector has not been handled properly due to the covered risk complexities. Besides, the lack of broker knowledge of risk management for power plant is also challenging factor. The realization of power plant business premium now stands Machine breakdown is the top factor causing the highest loss or 42 percent, explosion and fire 30 percent, natural disaster 22 percent, and other factors 6 percent.
Bisnis Indonesia, 11 June 2010  

Indonesia: Plans Mulled for New Financial Industry Regulator
Indonesia plans to set up a new regulator to improve the oversight of insurers, banks, brokerages, and other financial institutions by the end of this year, reports Reuters. The new independent agency, the Financial Services Authority (OJK), will have the power to approve and revoke permits and conduct investigations of financial institutions including insurers, banks, brokers, pension funds, finance firms, pawnshops, venture capital firms, fund management companies, savings and loan cooperatives. OJK will take over the central bank's current job of overseeing and regulating commercial banks and Bapepam's role of supervising non-bank financial institutions. Parliament still needs to give its legislative approval. Bapepam's chief Fuad Rahmany, who has played a key role in drafting the details of the proposed agency, said: "The important thing is that we will set up a structure that will address the current weaknesses such as conflict of interest between regulators and supervisors." The aim is to strengthen regulation. The Indonesian authorities introduced several improvements after the 1997-1998 Asian financial crisis, but oversight of the financial sector has remained weak.
E-Weekly Asia Insurance Review, Volume I Issue 56, 17 May 2010  

Pure Premium of Property Insurance Urgent
Insurance players urged the government to draft regulation on the pure premium for property insurance due to the unhealthy tariff war. The premium tariff war on property insurance could be minimized if there is official reference on the pure premium as it is the case with vehicle insurance. The effort is meant that business players are carefully offer the premium as it could harm the company given that the risk is higher than the collected premium business competition of property insurance is very worrisome. The premium regulation of property insurance has emerged in the past few years so as not to worsen the tariff war condition. The amount of insurance premium of the current property product in the industry has been lower than the normal bottom limit. Head of public relation division of the Indonesian General Insurance Association (AAUI), Willy Suwandi Dharma admitted the tariff war happened to the property insurance business lines has drawn concerns and caused reinsurance restrict the capacity for that business. He said the property insurance premium has been to low that it worries the long run development. "In fact, the application of tariff under fair price results in poor business,". The association actually has collected statistical data of insurance industry particularly the property sector since 1993 and expected it could serve as the basis for the pure premium tariff setting. AAUI has talked with the regulator on the regulation issuance on the property insurance pure premium tariff.
Bisnis Indonesia, 14 May 2010  

Catastrophe Losses Have No Impact on April Renewals
Reinsurance rates for 1 April renewals across most lines of property catastrophe business around the world continued the decline experienced at 1 January, according to reports issued by two global brokers, Aon Benfield and Guy Carpenter. The Japanese property catastrophe market saw risk adjusted price reductions of between 0% and 5% with capacity remaining stable. Significant US property catastrophe renewals at 1 April saw risk adjusted price reductions of -5% to -15%, a range of reductions similar to the levels experienced on 1 January renewals. According to Aon Benfield, despite significant reinsurer reports of first quarter income impacts, catastrophe losses from the Chilean earthquake, Windstorm Xynthia in Europe, and other global events, the impact on reinsurer capital is not significant. At 31 December 2009, the industry had returned to near record capital while facing level to declining demand for reinsurance from cedents. Mr Bryon Ehrhart, CEO of Aon Benfield Analytics, said: "Reinsurance capacity, even after considering the first quarter losses in non-peak zones, continues to exceed insurer demand for reinsurance." Mr Chris Klein, Global Head of Business Intelligence, Guy Carpenter, said: "The April 1, 2010 reinsurance renewals are dominated by Asia, but were conducted with one eye on the catastrophes that occurred elsewhere in the world." However, reinsurer will have reduced headroom for a larger catastrophe later in the year, says Guy Carpenter in its report. Up to half of catastrophe loss ration budgets were consumed. This echoed an earlier report from Willis Re saying the heavy losses of the first three months will leave reinsurers exposed to the historically more loss-prone third and fourth quarters.
E-weekly Asia Insurance Review, Volume I Issue 26, 05 April 2010  

Insurance for Geothermal Power Plant Discussed
State electricity company PLN views insurance scheme for geothermal-fired power plant projects will be able to create investment certainly for PLN and independent power producers (IPP). Director of Business and Risk Management at PLN, Murtaqi Syamsuddin revealed the company planned to develop 3,911 MW geothermal-fired power plants in the second-batch 10,000 MW mega-project estimated to require US$12 billion investment. The insurance scheme proposal will be discussed with the government despite the fact it previously had been submitted to the Indonesian Infrastructure Financing (PII). "We have made informal talks with PII and will be invited by the Fiscal Policy Agency BKF tomorrow (today)," he said yesterday. He exposed all this time there had not been certainly regarding exploration risk cost, creating the need for cost recovery. According to him, such an uncertainty could be dealt with by insurance-like guarantee scheme. He added the scheme would need premium paid to the guarantor, the amount of which would depend on the agreement between PLN and IPPs. "We can go with fifty-fifty scheme." Such insurance was also important since it would need a huge budget of US$6 million to drill one exploration well.
Bisnis Indonesia, 25 March 2010  

Indonesian Premium of Oil and Gas Insurance Urged to Change
The Oil and Gas Upstream Supervisory Agency (BP Migas) expected the insurance premium for the sharing Contract of Contrators (KKKS) assets in the negotiation of reinsurance extension agreement involving international reinsurance could be cut up to 10 percent. Senior Manager of Risk Manager of BP Migas Dulas Menam Ritonga said the track record of oil and gas insurance in Indonesia is still good at the 40 percent, he said. The effort relating with the asset risk coverage consortium led by PT Tugu Pratama Indonesia will come an end soon. New consortium will be led by PT Asuransi Jasa Indonesia, and Tugu Pratama is one of the consortium leaders. Marketing Director of PT Tugu Pratama Indonesia Adi Sofyadi said a better risk management will boost up industry with positive performance.
Bisnis Indonesia, 18 March 2010  

Insurance Claims Stand at IDR54,39 Trillion
The national insurance industry claims stood at IDR54.39 trillion last year or rose 30.84 percent as from 2008 claim or IDR41.57 trillion. Data of insurance bureau of the Capital Market and Finance Institution Supervisory Agency (Bapepam-LK) shows the claim if insurance industry in 2009 stood at IDR40.70 trillion or rose 29 percent as from IDR31.69 trillion in 2009. Insurance bureau chief of Bapepam-LK, Isa Rachmatawarta said the mounting claim grew along with soaring premium number last year. Meanwhile, the revenue of national insurance industry cumulative premium stood at IDR89.48 trillion in 2009 or rose 20 percent from IDR74.06 in 2008. "Premium growth is commonly followed by the soaring claims," he said. However, the higher claims growth that the premium rise will influence the profits tapped by the insurance industry. Loss Insurance premium grew 15 percent 2009 due to the swelling claims by 36 percent as from that of in 2008. National loss insurance profits stood at IDR2.67 trillion last year. Chairman of the Indonesian General Insurance Association Kornelius Simanjuntak said the swelling loss insurance claims last year were mostly contributed by natural disaster claims such as earthquake and flood.
Bisnis Indonesia, 18 March 2010  

Indonesian Insurers Need To be Prepared To Handle Claims from Urban Quakes
Insurance companies in Indonesia should be ready to handle massive claims should a major quake strike a more densely populated city than Padang which has a population of 900,000 and which was hit by a 7.6 magnitude tremor in September, reports the Jakarta Globe citing Mr Alberto Hanani, an insurance specialist at the University of Indonesia. He says that insurers "need to be very careful as a quake like the one in Padang would leave them highly exposed". He warned: "They could end up defaulting on their obligations if they don't have enough capital and too many earthquake-related damage claims come in at the same time. "However, Mr Frans Sahusilawane, President of PT Asuransi Maipark Indonesia, the country's earthquake risk reinsurer argues that insurers are experienced at calculating earthquake risks in different parts of the country. He says that it is highly unlikely that calculations would be wrong "as we avail of the services of experts to assess the likelihood of earthquakes in the country's major centres". Referring to the series of quakes which hit Padang and Jambi recently, he said: "We are confident we are capable of coping with up to four times what we will have to pay out in claims to policyholders in Padang and Jambi," he said. He adds that claims from the quakes are expected to total Rp200 billion (US$21 million). Following the Padang earthquake, insurance firms immediately slapped a moratorium on issuing new policies and renewing existing ones until properties in the area are inspected for damage. Premiums in Padang and Jambi have also soared by between 50% and 60% since.
e-Weekly Asia Insurance Review, Volume IX Issue 44, 02 November 2009  

Insurers' Must Raise Cat Rates in Indonesia
The recent natural catastrophes in the Philippines and in Padang, Indonesia, have raised much consumer awareness about insurance. Insurers' must raise prices, said the Indonesian insurance regulator to more than 400 delegates at the 16th Indonesia Rendezvous, organized by the Asosiasi Asuransi Umum Indonesia (AAUI) held in Bali, last week. "The insurance market has not reached equilibrium for the cost to the industry. Insurers' must raise rates and better manage catastrophe risks and reduce concentration of exposures," said Mr Isa Rachmatarwata, Chief of Insurance Bureau, Indonesia. Adding: "the crisis will encourage insurers to be more prudent with their management controls. "The Indonesian market has been buoyed with challenges and a competitive insurance industry with penetration still low at 1.3%, according to sigma 2009. Gross premium increased to Rp21,909 billion (US$2.3 billion) in 2008, an increase of 24.77% from Rp17,560 billion y-o-y. The loss ratio increase 5.44% from Rp8,489 billion in 2007 to Rp8,957 billion, last year. As for the Government's third amendment to the regulation concerning minimum capital for insurance business conduct, at the end of 2007, 36 companies had equity below Rp40 billion, and in 2008, 24 companies had less than the minimum required. The AAUI Chairman, Mr Kornelius Simanjuntak, encouraged the companies to comply with the regulation and thanked the regulator for giving them more time to raise the equity until the end of 2010. Speaking at the conference about the impact of the global recession on the insurance industry, Mr Bijan Khosrowshahi, President and CEO of Fairfax International, said that it has raised more awareness on enterprise risk management, in addition to alternative risk transfer mechanisms such as captives, and self-insurance.
e-Weekly Asia Insurance Review, Volume IX Issue 44, 02 November 2009  

Insurance Market Recovers
Indonesia: The insurance market in the second quarter of 2009 improved after in the previous two quarters premium revenues had been stagnant and had even nearly been corrected. Data by the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) showed insurance premium in the second quarter of 2009 nearly jumped 10% to IDR20.95 trillion from IDR19.16 trillion in the previous quarter. The premium growth was supported by an increase of 12.83% in life insurance premium to IDR15.12 trillion from the previous IDR13.40 trillion. In the meantime, the general insurance sector only grew 1.21% from IDR5.76 trillion in the first quarter of 2009 to IDR5.83 trillion in the second quarter of 2009. Industrial claim surged 16.75% from IDR11.04 trillion in the first quarter of 2009 to IDR12.89 trillion in the second quarter. Claim in the life insurance industry also soared 16.6% from IDR8.25 trillion to IDR9.62 trillion, while claim in the loss insurance industry rose by 17.2% from IDR2.79 trillion to IDR3.27 trillion. Head of Insurance Bureau at Bapepam-LK Isa Rachmatarwata revealed premium increase followed by a surge in claims, although had yet reached an alarming rate, should be monitored by the industry's players. Chairperson of the Indonesian General Life Insurances Association (AAUI) Kornelius Simanjuntak was optimistic the positive performances in the second and fourth quarter would be able to patch up the potential risk of high claim.
Bisnis Indonesia, 25 August 2009  

Non-life business to rebound in 2010
Non-life insurance premium volumes are expected to remain flat globally in 2009, as the economic downturn is likely to curb demand, particularly in the commercial lines of business, says Swiss Re. However, capital shortages will support the upward movement of prices and demand for additional cover should increase in 2010 along with the economy. Profitability in non-life is likely to improve, mainly due to rising prices and stronger investment results. Non-life insurance has remained profitable despite falling premiums, according to Swiss Re. Non-life premiums globally declined marginally by 0.8% to US$1,779 billion in 2008, mainly due to lower demand for cover and softening rates. While non-life premiums fell 1.9% in the industrialized countries, growth in the emerging markets remained strong at 7.1% compared to 2007 levels. At the same time, underwriting results in non-life remained equally positive in most markets, despite very high losses from natural catastrophes. Mr Clarence Wong, Swiss Re's Chief Economist for Asia, commenting on the region, said: "Government efforts to stimulate economy (eg front-loading of infrastructure construction projects) could also result in new business opportunities for non-life insurers in Asia. For 2010, prospects for both premiums and profits are better."
e-Weekly Asian Insurance Review, Volume IX Issue No. 27, 06 July 2009