JAKARTA: Japanese general insurance companies are targeting the non-life insurance segments in Indonesia, taking advantage of the currently low penetration by domestic insurers.
The potential market of insurance business in Indonesia is still huge compared to that of Japan, said Fudej I Hama, President of The Non-Life Insurance Institute of Japan.
“Indonesia population is very large. Moreover though business penetration is small, the trend is rising. This is an interesting potential market,” he said Tuesday on the sideline of Indonesia-Japan Insurance seminar.
He explained that the growth of insurance companies in Japan has been declining in the past few years, mainly after a deregulation in 1996. Before the deregulation, the premiums growth of insurance companies had been increasing.
The deregulation on insurance business in Japan gave impacts not only on the market performance but also to premium tariff of general insurance products.
“After the deregulation, there has been tight competition between insurance companies in Japan, as they are free to offer tariffs,” he said, describing a tarrif war that has been ongoing.
Promising business potential in other countries makes Japanese insurance companies expand their market abroad such as Indonesia. In Japan, the growth of insurance industry tends to be stagnant due to the already high penetration.
“Moreover, with the potentially high economic growth and gross domestic products, Indonesia becomes an interesting and attractive market,” he said.
Indonesian insurance companies should improve services to their customers and third party to support the business growth at home, suggested Isa Rachmatarwata, Head Bureau of Insurance at Capital Market and Financial Institution Supervisory Agency (Bapepam-LK).
Good service to customers is really important in developing the insurance industry in Indonesia, said Kornelius Simanjuntak, Chairperson of Indonesia General Insurance Association on the seminar.
Japan insurance companies will not enter Indonesian market as a single company but they will merge with local companies or create joint ventures, said Yasushi Kuriyama, Managing Director of The General Insurance Association of Japan
“Many Japanese insurance companies come to Indonesia. I don’t think there will be new companies. The existing companies will likely expand their market share,” he said.
PT Asuransi Tokio Marine Indonesia will expand its business by improving the contribution from its local customers, said President Director Mitsutaka Sato.
The company, which is a joint venture between Tokio Marine Asia Pte. Ltd. and PT Asuransi Jasa Indonesia, records that the contribution of local customers is almost the same as the contribution from Japanese customers in Indonesia.
“In the next five years, we will increase the portion of local customers to 60%, while 40% would come from Japanese customers,” he said.
From January through August, Tokio Marine Indonesia has generated gross written premium (GWP) of US$30 million, equivalent to 40% of this year’s target US$75 million. (t04/ags)