Indonesia Re Grand Launch

The Indonesian Government's program to achieve economic independence in the Reinsurance sector actually started 62 years ago with the establishment of PT Reinsurance General Indonesia/ RUI or UmumRe at the end of 1954 to overcome the balance of payment burden from the large flow of reinsurance premiums abroad. Experience in many countries shows that having a large national reinsurance company is a must so that the national insurance industry can grow healthier and be able to function as one of the main pillars of economic development.

When UmumRe was formed by the Monetary Board and the Board of Governors of Bank Indonesia in 1954 - only nine years after independence - not many countries in Asia-Africa had similar companies, which once again showed the very far-reaching vision of the leaders in their early establishment of our country. A vision that was born from a high sense of patriotism and a desire to see Indonesia become big and move forward in the future.

Lately, it seems as if we have seen that history repeat itself. Over the years we have seen a large flow of reinsurance premiums overseas. Since 2013 the amount has reached around IDR 20 trillion per year, causing a current account deficit burden and loss of potential tax revenue of trillions of rupiah. For generations, our insurance practitioners have longed for the presence of a large national reinsurance company that could solve this problem but was powerless to make it happen because of an inability to supply the large capital needed.

In the end, the Ministry of State-Owned Enterprises with the function of SOE as an agent of development and value creation provides answers to the hopes of the national insurance world, as well as to achieve the vision of independence in the field of Financial Services. Through the March 2015 Economic Policy Package and Government Regulation Number 77 of 2015, the government has initiated steps to restructure and revitalize the national reinsurance industry by establishing a large and capable National Reinsurance Company, whose implementation is compiled in a roadmap for merging three state-owned reinsurance companies. As the first stage, we have completed the merger of ReINDO into PT Reasuransi Indonesia Utama (Persero)/ Indonesia Re which was formerly known as ASEI Re, as the operating holding company which we will launch tonight.

We would like to take this opportunity to express our deepest gratitude for the extraordinary support from the Coordinating Minister for the Economy, the Minister of Finance, the Minister of SOE, the deputies of the SOE ministries and their staff as well as the Chairman of the OJK Board of Commissioners, the Commissioner - Chief Executive of the IKNB OJK, the deputy commissioners. IKNB and its staff, are in the process of forming Indonesia Re as this national reinsurance company. The national insurance industry will record the contribution of ladies and gentlemen in the history of the revival of national insurance, one of the milestones was set.

We are grateful that there is another additional landmark in the insurance sector which has become the legacy of our generation for the Indonesian nation and state.
Our generation's legacy in insurance:
• Indonesian Insurance Institute/AAMAI - 1993, international affiliated professional degree standards
• PT Reasuransi MAIPARK Indonesia - 2004, the strength of the disaster risk database is the target of the world's top catastrophe modellers.
• Indonesian Insurance Mediation and Arbitration Agency - 2006, insurance industry protection guarantees for consumers against possible bad practices of individuals or insurance companies
• PT Reasuransi Indonesia Utama (Persero)/ Indonesia Re - 2016
 
Our direction and strategic steps to carry out tasks in accordance with PP 77/2015 and the BUMN reinsurance roadmap are arranged in a vision:
 
To become a large national reinsurance company as the flagship of Indonesian reinsurance with regional progress
 
Four missions:
• Increase the supply of reinsurance capacity in the country;
• Increase the knowledge and innovation capabilities of the national insurance industry;
• Reducing the flow of reinsurance abroad;
• Exporting reinsurance services to regional areas.
 
To carry out this mission we need three resources: Capital, Knowledge and Technology. In terms of capital, we have received a commitment from the Government regarding the fulfilment of the capital we need, either through state capital participation or through SOE synergy, for our operations which are projected to reach premium production of 15-18 trillion rupiah in the next five years, three times from IDR 5 trillion today. At this level, Indonesia Re will occupy a leading position among national reinsurance companies in ASEAN, jumping far from the current 7th position.

Whether we realize it or not, POJK 14/2015 regarding optimizing national retention capacity with all its merits and benefits can result in a reduced supply of knowledge from the international reinsurers that has been enjoyed by our national insurance companies. This lack of knowledge supply will weaken our national competitive advantage in the post 2020 AEC open competition.
This knowledge gap must be closed by the national reinsurer who has received great benefits from the POJK. We are aware that in the function of BUMN as an agent of development and value creation, we must be at the forefront to provide solutions to this matter. For this reason, our organizational members need to be equipped with state-of-the-art knowledge as a source of innovation and technology that is no longer an enabler but is a strategic technology.

The large capital will enable us to invest in strategic technology and establish the ReINDO Institute and ReINDO Survey which will collaborate with universities and research institutions to present state-of-the-art knowledge regarding various risks that are attributes of insurance products.

With the development of the complexity of risks and emerging risks such as climate change, nanotechnology, cyber risks, we are facing a game changer and a changing era where knowledge from practical experience is no longer adequate. Only with the mastery of state-of-the-art knowledge and technology can we innovate to create values that can serve and meet increasingly demanding consumer expectations.

It is thus clear that the benefits of large capital prepared by the Government are not only for back-up of our portfolio development to reduce the current account deficit and reduce losses due to the loss of potential tax revenues from our country, but also have strategic value as a first step in creating the knowledge and technology needed by the industry in the future.
Regarding this, we would like to express our deepest gratitude to the Government and DPR for enabling the large capital needed by this industry.
In such an operational scale projection and according to the roadmap, Indonesia Re can not only operate in the scope of a market or country but must be expanded to the regional level in order to achieve a stable portfolio distribution. We are grateful and proud to say that Indonesia Re's presence has received support from various partners in the ASEAN region and even Asia Africa, where the world's best engines of growth and underwriting results are located.

This is because even though legally Indonesia Re is a company founded in 1985, and is only 31 years old, our organization has a 62 year old-corporate DNA, which has helped raise many of our national insurance companies; the largest and is active in various forums for Asian-African insurance and reinsurance activities.

Even so, Indonesia remains our main market, where our capabilities are maximally operationalized. In this regard, on behalf of all my colleagues in Indonesia Re, I would like to convey:
To our ceding companies: We do not only serve with our CAPITAL capabilities, we will serve with our CAPABILITIES. Currently our implementation of the NES/ New Excellence Service records an average claim payment of 10.4 days after confirmation - 20 days faster than the applicable provisions, and to our colleagues our fellow national reinsurance companies: We will not show an example of our STRENGTH, we will show you the power of our EXAMPLES.

Together, let's build a strong Indonesian insurance industry. May the LORD help our efforts.