With under 2 percent of the total population in the country (240 million people) possessing insurance, Indonesia offers huge market potential for insurance firms, which are currently racing to provide products to suit people’s various needs.
Property-casualty and general insurance company Chartis, a subsidiary of the American International Group (AIG), is among the front-runners, which aims to explore the business potential in this under-penetrated market.
With a growing middle class due to robust economic growth over the past several years, the country has been targeted as one of 10 countries worldwide which constitute the company’s priority market.
Chartis entered Indonesia in 1970 and currently employs 400 staff, serving 70,000 customers across the country.
To discuss its future business plan in the country, The Jakarta Post’s Rangga D. Fadillah talked with Chartis’ global chief executive officer Peter D. Hancock. Below are excerpts from the interview:
Question: How does Chartis view Indonesia?
Answer: Chartis, as you know, is one of the largest insurance companies in the world; we operate in 90 countries and we continually look at our future growth.
We have identified a small number of countries, around 10 in all, which are our priority for growth. Indonesia is one of those 10 countries and it is one of the most promising. There are three countries in Asia where we see very exciting growth opportunities; they are Indonesia, China and Vietnam.
What are your business plans in Indonesia?
We see there are two sides. On the commercial insurance side, our priorities are infrastructure construction projects. We see a tremendous opportunity in the construction of roads and energy infrastructure. We can provide insurance for the construction and all the associated needs, like personal injuries.
On the personal insurance side, we see an opportunity to deliver cost-effective products that will suit local needs, using technology that we have leveraged around the world. I think the market is still under-penetrated, but the growing middle class needs more insurance, such as automotive insurance.
Travel insurance is also an interesting growth opportunity for us. Thus, we focus on delivering those products in a way that is efficient for people and for our partners.
What are the main challenges in running an insurance business in the country?
The main challenge is distribution. Indonesia is geographically very dispersed. I think it is also a country that embraces the Internet and mobile technology. So, we are very happy to use our technology to reach people in a more effective way.
I think the technology will enable our customers to more easily do business with us by minimizing the use of paper and speeding up the claims procedure. So, I think some of the geographical challenges can be overcome via technology.
For commercial insurance, most Indonesian companies are small- and medium-sized. How do you view them as market targets?
This is an attractive opportunity for us. We aim to provide small-scale, micro-insurance associated with micro-lending. The key thing here is to offer competitive products, which cover all their needs in a standardized way. The challenge is still in the distribution, and finding the right partners.
Indonesia is a natural disaster-prone country; are you not afraid of doing your property-casualty business here?
Catastrophe-prone areas always create challenges but we are uniquely capable of managing sizable catastrophic risks. As I said, we operate in 90 countries around the world, which include disaster-prone territories, so by diversifying our business, we ensure that we have a long livelihood for all the catastrophes that may occur in one year. It’s one of the benefits of having such a large global firm providing capacity.
Why do you think it is necessary for individuals and companies to have insurance?
In my view, in an economy without adequate insurance, you get a lot of precautionary saving; people save money as their precaution against unexpected events and, likewise, companies tend to have very conservative balance sheets.
They will have more cash than they need with precautionary saving. That is an inefficient way for an individual to manage their finances, and an inefficient way for companies as well.
That money could be invested in education for children, or starting a business. In the case of a corporation, it could be invested to expand its businesses. It’s a very efficient way to manage unexpected risks.
Which business sectors are most interesting?
Infrastructure construction and the energy sector.
What are your strategies for reaching grassroots customers?
We provide micro-insurance, and we offer takaful window (Islamic insurance). Together, these two products will help make insurance acceptable to a part of society that is not yet familiar with insurance.
How do you see the future of the two products?
In micro-insurance, we have seen an interesting combination of technology that makes it cost-effective to transact on a low scale and still be modestly profitable. We see it as a potential long-term investment.
Source:
thejakartapost.com
Property-casualty and general insurance company Chartis, a subsidiary of the American International Group (AIG), is among the front-runners, which aims to explore the business potential in this under-penetrated market.
With a growing middle class due to robust economic growth over the past several years, the country has been targeted as one of 10 countries worldwide which constitute the company’s priority market.
Chartis entered Indonesia in 1970 and currently employs 400 staff, serving 70,000 customers across the country.
To discuss its future business plan in the country, The Jakarta Post’s Rangga D. Fadillah talked with Chartis’ global chief executive officer Peter D. Hancock. Below are excerpts from the interview:
Question: How does Chartis view Indonesia?
Answer: Chartis, as you know, is one of the largest insurance companies in the world; we operate in 90 countries and we continually look at our future growth.
We have identified a small number of countries, around 10 in all, which are our priority for growth. Indonesia is one of those 10 countries and it is one of the most promising. There are three countries in Asia where we see very exciting growth opportunities; they are Indonesia, China and Vietnam.
What are your business plans in Indonesia?
We see there are two sides. On the commercial insurance side, our priorities are infrastructure construction projects. We see a tremendous opportunity in the construction of roads and energy infrastructure. We can provide insurance for the construction and all the associated needs, like personal injuries.
On the personal insurance side, we see an opportunity to deliver cost-effective products that will suit local needs, using technology that we have leveraged around the world. I think the market is still under-penetrated, but the growing middle class needs more insurance, such as automotive insurance.
Travel insurance is also an interesting growth opportunity for us. Thus, we focus on delivering those products in a way that is efficient for people and for our partners.
What are the main challenges in running an insurance business in the country?
The main challenge is distribution. Indonesia is geographically very dispersed. I think it is also a country that embraces the Internet and mobile technology. So, we are very happy to use our technology to reach people in a more effective way.
I think the technology will enable our customers to more easily do business with us by minimizing the use of paper and speeding up the claims procedure. So, I think some of the geographical challenges can be overcome via technology.
For commercial insurance, most Indonesian companies are small- and medium-sized. How do you view them as market targets?
This is an attractive opportunity for us. We aim to provide small-scale, micro-insurance associated with micro-lending. The key thing here is to offer competitive products, which cover all their needs in a standardized way. The challenge is still in the distribution, and finding the right partners.
Indonesia is a natural disaster-prone country; are you not afraid of doing your property-casualty business here?
Catastrophe-prone areas always create challenges but we are uniquely capable of managing sizable catastrophic risks. As I said, we operate in 90 countries around the world, which include disaster-prone territories, so by diversifying our business, we ensure that we have a long livelihood for all the catastrophes that may occur in one year. It’s one of the benefits of having such a large global firm providing capacity.
Why do you think it is necessary for individuals and companies to have insurance?
In my view, in an economy without adequate insurance, you get a lot of precautionary saving; people save money as their precaution against unexpected events and, likewise, companies tend to have very conservative balance sheets.
They will have more cash than they need with precautionary saving. That is an inefficient way for an individual to manage their finances, and an inefficient way for companies as well.
That money could be invested in education for children, or starting a business. In the case of a corporation, it could be invested to expand its businesses. It’s a very efficient way to manage unexpected risks.
Which business sectors are most interesting?
Infrastructure construction and the energy sector.
What are your strategies for reaching grassroots customers?
We provide micro-insurance, and we offer takaful window (Islamic insurance). Together, these two products will help make insurance acceptable to a part of society that is not yet familiar with insurance.
How do you see the future of the two products?
In micro-insurance, we have seen an interesting combination of technology that makes it cost-effective to transact on a low scale and still be modestly profitable. We see it as a potential long-term investment.
Source:
thejakartapost.com
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