Image Header

Sabam Hutajulu, president director, and Andy Samuel, technical director, PT Asuransi Tugu Pratama Indonesia, said the company is exploring additional growth in Asia, Africa and in the captive sector. Hutajulu and Samuel spoke with A.M.BestTV at the 22nd Indonesia Rendezvous, held in Bali. View the video version of this interview at:>

Following is an edited transcript of the interview.

Q: Let’s start with market and business trends in Indonesia. What are you seeing?
Samuel: We’ve seen for Indonesia there’s been double-digit growth over a period of five years. However if we look at the segmentation it’s more towards the retail segment or consumer lines, meaning that the middle class is growing. Their insurance awareness is even higher nowadays. In terms of the product itself, we see it’s still dominated by two lines of business, which is property and auto. For the market here it’s actually for retail, either they have their own distribution channel or they have to do some innovation in terms of ease of doing business. IT will be the critical foundation for the company to be able to deal with the retail segment. Other than that we see that the government is actually making a tremendous budget or initiatives on infrastructure. We see there are going to be a lot of initiatives on infrastructure projects.

Hutajulu: As long as the GDP growth is around 5.2% to 5.6%, which is third after China and India among the G-20 countries. Then GDP growth of 5.2%, although still dominated by consumption. I’m optimistic because the government is still pushing the infrastructure going forward, which will sustain the business and will impact the insurance industry positively.

Q: What are your thoughts on the ASEAN Economic Community’s plans to bring the region together? What impact do you think it is going to have on the insurance market scene in Indonesia?
Hutajulu: The ASEAN community is already started and insurance not yet. For us it’s about how prepared we are because it’s so borderless. From our side we have to have a strong foundation in terms of the people, in terms of the systems. Insurance penetration in Indonesia is still relatively very small. It’s about priority though, whether we want to also tap into overseas market or we then tap in or see whether there are products or new products or segments that we can work together in this market. It’s about priorities.

Q: The AEC will obviously foster sharing and potentially better practices. That can only be a good thing but there are hurdles as well. Do you think they’re insurmountable? Is this 2025 road map achievable?
Samuel: The concept of the AEC is open, free flow of information, free flow of capital, free flow of human resources among the members. You look at the perspective of the GDP, then the number of people in Indonesia reflects the largest market within the ASEAN. Meaning, the outflow from Indonesia will still be more than the flow of people, the flow of information from the other members of the to Indonesia. We will be the target, the largest market within the ASEAN.

Q: Bringing it back now to your company, are you looking for regional expansion under the AEC’s open market plan?
Hutajulu: Sure. Being A-rated by A.M. Best, there are opportunities for us to grow regionally, although, the first step will be to follow our major shareholders, Pertamina Expansions, in Asia and Africa.

Q: Are there any particular markets that you are going to be looking at?
Samuel: As Sabam already mentioned, one of the reasons why we go with an international rating from A.M. Best is to support our captive expansion plan. Mostly it’s going to be the Asian market. Other than our captive market we are going to also evaluate how is the market trend right now. If it is still on the soft cycle then probably we’re just going to be not active, but in a passive mood, to put it like that.

Q: Finally, I want to talk about the local ceding. It’s been a hot topic here for the past couple of days. What impact do you think it’s going to have on local reinsurers?
Hutajulu: The motivation of the government to place this ruling is to help to reduce the country’s deficit. We also need to remember that to have domestic capacity we need to have a capital injection from the government to the ceding companies in Indonesia. Knowledge wise we need to improve the quality of the people and the quality of the information system. It’s not easy. Also, very important, if you want to play in the regional market, international market you need to be A-rated, in order to be at par with your counterparts outside Indonesia.

Q: Raising that capital, how big a challenge is that going to be?
Samuel: It’s going to be a major challenge because we have to assess, knowing that Indonesia is prone to catastrophes. Also, when the government or the regulator imposes a local prioritization it doesn’t necessarily mean that Indonesia or the local reinsurance company will retain everything. That’s also one of the reasons why now the regulator is recommending all the reinsurance companies, including the insurance companies, have international rating.



Bagikan post ini: