As a longstanding player in Indonesia’s insurance sector, our company offers several products: property insurance, motor insurance and marine insurance to name a few. Five years ago, we moved into micro-insurance and this product really took off two and a half years ago following a comprehensive research and design phase. We expect that micro-insurance will play a big role in the development of the economy, because Indonesia still has a large low-income segment of its population. Low-income individuals usually rely on the government when there is a disaster and thus are not fully aware of insurance products. Micro-insurance is the ideal entry for this subset of the market, and we have taken an active role in introducing this product to Indonesia. Our move into this field was facilitated by discussion with the academic community.

For the future, we plan to fine tune the provision of our existing products by developing new formats to deliver them to customers. This involves implementing technology to reach out to a wider customer base. Making use of the internet, for example, is an interesting opportunity to pursue. We have previous experience in adapting our products and services to new formats, as seen in our development of a system whereby we could make our micro-insurance available via mobile phone devices. Going forward we plan to focus more specifically on community-based micro-insurance, popularised in India. This will necessitate sitting down with leaders of rural areas to design products tailored to the needs of their individual community, which tend to vary depending upon the main source of income in the area.

At present, only the major cities are financially literate when it comes to insurance, which explains the low penetration for general insurance in the country. It is because of this that the government has set about improving financial literacy in rural areas. Given this context, the outlook for Indonesia’s general insurance sector is much brighter because this is not an initiative that can be carried out by the private sector alone. Over the next ten years, I thus expect to see a substantial boom in the insurance sector here.

The most important area here is the protection of life, as it is not uncommon for there to be only one bread-winner in a family. As such, having a life insurance policy is a must for many Indonesians. We have also seen a rise in the popularity of health insurance, led by the government to ensure the well-being of its population.

Providing insurance to SMEs is best carried out by creating products to match their unique needs.

In line with our community-based approach to micro-insurance, we work with SMEs to discover the type of coverage suited to their operations. ACA is very much focused on a localised approach and this will be our strategy moving forward as more SMEs mature to the point of looking for general insurance.

There are certain common products that can be brought to other ASEAN countries, but it is important to keep in mind that every market has its own culture, system and laws. When we speak about the upcoming ASEAN Economic Community in 2015, the question that needs to be asked is to what extent this integration will mirror that of the European Union. In its current form, the planned ASEAN One Market involves far less harmonisation than the EU, and it is because of this that our insurance products for Indonesia may not necessarily be applicable in regional markets.

With that said ACA has been a regional player since the 1980s, and has made sure to adapt to differences between countries in the ASEAN by offering different designs and product formats.

We have been a national company for all these years and understand the lure of Indonesia to foreign investors given the market’s huge potential. When entering Indonesia, these foreign entities should seek well established partners with a strong foundation as developing this foundation themselves can be a very time consuming and expensive process.

To an Indonesian company like us a foreign partner can bring capital, though at present we are not yet open to offering our shares to international parties. Investors coming into Indonesia should keep in mind that some of the businesses being made available were created by their founders with the ultimate goal of being sold to foreigners and as a result prioritised premiums as opposed to developing a strong foundation. This is not the case with our company, in that we have a proven history and track record demonstrative of our standing as a leader in the sector.

Moreover, we are open to taking upon the role of distributor for foreign companies looking to offer their products in the market. ACA is interested in representing companies that wish to have a presence in Indonesia but do not want to set up operations here.

I would like GBG Indonesia’s readers to know that improving financial literacy has become a priority for the government. It is our hope that actively discussing insurance and encouraging people to end their day with a conversation on this topic will support the government’s initiative and lead to further market penetration.