General Lecture of the President Commissioner of IndonesiRe

Ternate - Regarding the completion of merging two national Reinsurance companies, PT Reasuransi Umum Indonesia (Persero) into PT Reasuransi Indonesia Utama (Persero) at the end of December 2015, there is no longer any reason for the Indonesian reinsurance industry to progress and develop.

Indonesia runs a reinsurance deficit. Every year there are at least IDR 20 trillion in insurance company premiums that run to foreign reinsurance companies. In fact, it is projected that within the next ten years, premiums that run abroad could reach IDR 130 trillion. “This should not have happened”, said the President Commissioner of PT Reasuransi Indonesia Utama, Ali Masykur Musa, when handing over new students for the 2016-2017 academic year at Khairun Ternate University, Monday (15/8/2016).

Before enthusiastic students, Ali continued that the absence of a large domestic reinsurance company was the trigger. Of the four reinsurance companies in Indonesia, the largest value of equity is only IDR 700 billion. This is very far from the equity value held by local reinsurance companies owned by Malaysia which reached IDR 4 trillion. In fact, local reinsurance companies in Singapore have equity of IDR 9. trillion.

By restructuring and revitalizing the insurance industry in Indonesia, the current account deficit is worth tens of trillions of rupiah. Through a large national reinsurance company it also has the opportunity to return the taxes that have been lost so far. "If reinsurance is through a foreign company, there will be no taxes that enter Indonesia," said Ali.

The total investment value of the insurance industry in Indonesia continues to grow. In 2012, the total investment value was IDR 496.79 trillion. In fact, three years earlier the total investment value had only reached IDR 283.20 trillion. In 2013, the value has reached IDR 538.45 trillion. Interestingly, 85% of this figure is long-term low-cost funds.

The problem is that 70% of life insurance in Indonesia is controlled by multinational companies. Legally, this is a joint venture. Meanwhile, 50% of general insurance is reinsured abroad. This is the reason why the government needs to restructure and revitalize the reinsurance industry in Indonesia.

For information, Indonesia Re is the result of the transformation of the Indonesian Export Insurance (ASEI) which the government made a holding company for a national reinsurance company and changed its name to PT Asei Reasuransi Indonesia (Asei Re) in 2014. Then, Asei Re transformed with a name change to PT Reasuransi Indonesia Utama (Indonesia Re) in early 2015.
In line with this transformation, Indonesia Re spun off its direct insurance business line by establishing a subsidiary, PT Asuransi Asei Indonesia (Asuransi Asei), which is a loss insurance and credit guarantee company in 2014. The direct insurance business portfolio has been shifted to Asuransi Asei.

After this merger, Indonesia Re will consolidate its business lines and improve reinsurance services to its customers, to provide satisfaction to its customers over the years. Indonesia Re is committed to improving performance, developing information technology so that the quality of service to customers is better.

In the roadmap for the transformation of the national reinsurance company, the government will also increase the capital of Indonesia Re so that it becomes a superior national reinsurance company and is able to compete in the regional and global market.