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Indonesian insurers seen boosted by deregulation

SINGAPORE: Indonesia's top insurance official said on Wednesday that deregulation has greatly helped his country's insurance industry over the past eight years.

"Despite the higher competition, the entry of (foreign) joint venture companies also caused positive impact to local companies," said Sophar Toruan, director of insurance in Indonesia's Directorate of Insurance.

Toruan told an industry conference that Indonesian insurers have learned from their foreign joint venture partners.

He said that all Indonesian insurers have also benefited indirectly by learning more about customer service, marketing, new products, and sound underwriting methods.

"The presence of foreign insurance providers is not only beneficial to local partners through strengthened capital and transfer of technology and know-how, but in creating a positive (industry)."

Indonesia began to liberalise its insurance sector in 1988. The number of foreign joint ventures has increased to 31 from 17 in 1990, he said. The country has another 124 domestic insurers.

Toruan said Indonesia's insurance industry was still in its infancy, contributing only 1.5 percent of the country's gross domestic product in 1994.

"We welcome foreign companies which are doing business in life insurance, non-life insurance, reinsurance, and broking services to establish joint ventures in Indonesia," he said.

Another speaker at the same conference said Indonesia was one of the only countries in the region that saw an increase in foreign insurers between 1986 and 1994.

The number of foreign insurers increased to 26 in 1994 from 13 in 1986, said Sue S C Tang, chief of the United Nations Conference on Trade and Development's insurance programme.

Tang said that foreign insurers increased their Indonesian market share to 16 percent from 13 percent over the same period.-Reuter