Indonesian General Insurers want bigger say

Jakarta
General insurers welcome the extension of the deadline for new capital requirements, but demand a say in the formulation of new regulations so as not to create undesired negative impacts on the industry.
"We want the government to discuss any revisions to be made with us first," Kornelius Simanjuntak, head of the General Insurance Association of Indonesia (AAUI), said on Monday.
"To this day, there seems to be an incoherence between the policy makers and the companies running the general insurance business."
The remarks came after the government recently extended the deadline for insurers to comply with tougher capital requirements in a consolidation drive aimed at strengthening the industry.
In June last year, the government issued regulation No. 39, stipulating that an insurer must have capital of at least Rp 100 billion, to be achieved in phases that would take three years to complete -- Rp 40 billion by 2008, Rp 70 billion by 2009 and Rp 100 billion in 2010.
Objecting to the new regulation, AAUI then formed an Ad Hoc team and demanded a review on the basis that as of the end of June, 26 general insurers still had equity worth less than Rp 40 billion.
Later in 2008, the government announced a revision, which extended the deadline to ensure Rp 40 billion by 2010, Rp 70 billion by 2012, and Rp 100 billion by 2014.
"However to this day, we have yet to receive a copy of this regulation," Kornelius said, pointing as an example of the gap between the decision makers and industry players.
Kornelius added that even with the revised time limits, small insurers will still have difficulties in complying, especially with the ongoing global economic problems.
"The fourth quarter of last year already saw a slowdown in the business, particularly vehicle insurance," he explained. "Vehicle sales are going downhill. That is bad news for the insurance business."