Problems Within Indonesian Insurance Company

Still related with my previous post about insurance, if I had talked about the threats that insurance companies must face, now I’m going to talk about the insurance companies itself.

There are several problems that Indonesian Insurance Company have, those are :

Over Supply
The insurance market in Indonesia actually is not as big as expected. So there is an oversupply in the market. There are 40 life insurance companies and 92 common insurance companies in Indonesia, but none of them have significant market share, even with the market leader. AIG Life (life insurance) only have 13.76% and Jasindo (common insurance) only have 13.3% (2005 data).

Big 10 Life &
Common Insurance Premiums (in Billions Rp) Year 2005
Num Company Name Premium Market Share (%) Num Company Name Premium Market Share (%)
01 AIG Life 3064.3 13.76 01 Jasindo 2161.5 13.3
02 Bumiputera 2982.9 13.4 02 Sinar Mas/ASM 1271.6 7.82
03 Prudential 2145.9 9.64 03 Tugu Pratama/TPI 1249.9 7.69
04 Manulife 1476.3 6.63 04 Astra Buana 1209.6 7.44
05 Jiwasraya 1255.4 5.64 05 Asr. Central Asia 720.3 4.43
06 Indo Life 1232.2 5.53 06 Wahana Tata 675 4.15
07 AIA Indonesia 1119.4 5.03 07 Mitsui Sumitomo 587 3.61
08 AXA Mandiri 977.3 4.39 08 Allianz Utama 581.5 3.58
09 Allianz Life 829.7 3.73 09 AIU Indonesia 533.9 3.28
10 Sequis Life 821 3.69 10 Raksa Pratikara 408.9 2.52

Lack of Equity
Yet there are so many insurance companies in Indonesia, but most of them are lack of money. There are 50 of 91 common insurance companies which have equity under Rp. 50 billions in 2006, and it’s predicted that there are 55 insurance companies would fall (13 from life insurance, 42 from common insurance) in order to fulfill the Rp. 40 billions minimum equity requirement rule which has applied in 2008 (based on PP No 39 tahun 2008).
Lack of High Quality Resources
Compared to foreign insurance companies, Indonesian insurance companies don’t have much experienced and trained insurance agents. It’s important because as I told you before, many Indonesians are lack of knowledge or misunderstanding on insurance services, insurance agents should work hard to educate and make them sure.

Anton Hermansyah
Logo of Anton Hermansyah

Credits :

  • Mr. Hotbonar Sinaga (President Director of PT Jamsostek and my great lecturer)
  • Mr. Budi Hermana (Lecturer of Gunadarma University, visit his blog here)


6 Responses to “Problems Within Indonesian Insurance Company”

  1. Equity Says:

    I find it always interesting to read great blogs with good content about Equity because we can learn so much about that subject. Your blog regarding Problems Within Indonesian Insurance Company seems quite relevant even if I dont agree with everything. Thx

  2. ipank Says:

    I am sorry friend, but I am not really agree with you
    Because there are more than 250 million of indonesia citizen. They just have to be more creative to get more customer.

  3. insurance community Says:

    Insurance today has become the backbone of the finance sector and i believe the problems of insurance companies of Indonesia that you have shared in your article is really true. Thanks for sharing such a worthy information with all of us.


    Andy Lewis

  4. Anton Hermansyah Says:

    All we need is to solve this paradigm that Insurance is expensive, also I looked back at my comic book (Disney’s Donald Duck album for sure), there are many stories which deal with insurance salesperson. the image about the insurance salesperson is is mean and cruel, and the image about insurance you pay for something that you won’t need.

    We need a kind of vision, which describe insurance as something we need, do not scare them

    Anton Hermansyah

  5. Ned Says:

    This post is from someone that has been selling Life Insurance for the past 20 years, and the last 3 years online. Life Insurance is a needful thing, yes, something that you never want to use, but let’s face it, you will use one day guaranteed, probably the only guaranteed thing in life. So it is important that you are careful in researching the various life insurance companies to find the right policy for you. The best way I have found to do that is searching online and finding a good website that has a comparison calculator.

  6. Brad Says:

    There is obviously a lot to know about insurance agents make. I think you made some good points in Problems Within Indonesian Insurance Company

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