The Recent Indonesian Car Market

By Author: Tracy Choi
Total Articles: 6
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this article contains recent premium tariff for car insurance in Indonesia

In the end of June, 2007, the Indonesian Secretary of state for Financial started new execution of genuine top quality amount for auto insurance company. With the Financial Ministerial Control No.74/PMK 010/2007, all of Indonesian general insurance organizations will be required to satisfy the minimal requirement of genuine top quality depending on the risk profile for last 5 (five) decades.

From the table shown*, the genuine top quality for comprehensive protect ranges from 1.19% to 2.18%, and for total loss protect started from 0.56% to 0.74%. As allegedly said by Head of Insurance Institution in several press conventions, providers which fail to satisfy the minimal requirements will be sanction from just written reminder up to revoke their license. This new establishment has caused several small insurance organizations were worried about losing their company because can not tackle big players.

The recent condition above is established by Indonesian insurance regulator according to actual industry situation for many decades ago ...
... that auto insurance company was tend to become a not-fair competition. This fact in the future time will dangerous not only for the quality services to people but also the financial health of insurance organizations. For example, commission percentage for intermediaries such banks, leasings or brokers can surpass 50% from gross top quality paid out by people. It means that the nett top quality for technical reserve is very little. For years, this situation surely will not be a good sign in insurance company.

The Indonesian Insurance & Reinsurance Broking Association gives another view about this new regulation. The govt must re-arranges the approval company permits for organizations or institutions that is not as main part of insurance industry components which also performs in insurance company. As an example, there is a change of top quality amount carried out by bank or renting organizations. The change can ranges from 50% to 70%. They propose a troubleshooting that for condition of used cars or truck top quality amount will be better given to the industry mechanism. The govt in this field just performs as supervisory board to ensure that top quality amount charged to client has been sufficient and meet prudent underwriting principles.

Finally, we hope that new regulation above will help Indonesian insurance company to quit from difficult situation and insurance organizations should take an action to strengthen their company through continually reasonable execution. If organizations can accomplish this regulation, the better company environment will be created and more valuable benefit will be taken by all of the parties involved.
Resource: http://www.citybase.co.id/classifieds/mobil_c48