Global Business Guide Indonesia

Bosowa Asuransi Bosowa Asuransi Bosowa Asuransi Bosowa Asuransi Bosowa Asuransi Bosowa Asuransi Bosowa Asuransi Bosowa Asuransi
Bosowa Asuransi | Mr Siegfried Cornelius Salawati
Mr Siegfried Cornelius Salawati

The Indonesian government’s involvement in socialising insurance is crucial and a new regulation is currently being prepared that includes compulsory insurance for needs such as floods and earthquakes

Mr Siegfried Cornelius Salawati, President Director

Since Bosowa Asuransi (formerly Periscope Insurance Co Ltd) was originally founded in 1969, what can you tell us about the evolution of the company over the decades and your current positioning within Indonesia’s general insurance sector?

Periscope Insurance Co Ltd was established in 1969. In 1999 it was taken over by Bosowa Group which is owned by a former Vice President of Indonesia. Currently we have 29 branches across Indonesia and over 2000 agents.

In Indonesia, there are three classifications in the insurance sector; the upper class, the middle class and the lower class. Our aim is to be in the top 5 of the middle class segment. To do this, our shareholders have supplied the adequate capital to grow the company and comply with the insurance industry regulations. We have expanded our presence and specialised our services for East Indonesia. This is because Bosowa Group is originally from East Indonesia with headquarters in Makassar. Our strength and market is there as opposed to West Indonesia. Also, the government of Indonesia is trying to develop the Eastern part of the country so this is why we are concentrating on this.

In 2014 we changed our name to Bosowa Asuransi to align ourselves with the rest of the companies in the Bosowa Group and create a strong brand name. We are planning to increase our market share by leveraging the Bosowa Group name and reputation as the 15th largest conglomerate in Indonesia.

What is your outlook on the future development of the general insurance sector in Indonesia?

The penetration rate for general insurance in Indonesia is low at less than 2%. Indonesia is unique in that insurance is not a primary item in terms of spending but rather a secondary consideration. Indonesia as a developing country should have a compulsory system such as when people take on loans they must be obligated to purchase insurance as trying to convince people door to door cannot work. The Indonesian government’s involvement in socialising insurance is crucial and a new regulation is currently being prepared that includes compulsory insurance for needs such as floods and earthquakes. The floods in Jakarta every year highlight the need for insurance and extended protection for Indonesian individuals and businesses.

Our outlook remains positive as Indonesia’s large population and low rate of general insurance penetration leaves ample room for growth. The new Jokowi government administration's plan to focus on infrastructure spending opens up a lot of opportunities for the general insurance sector.

The upcoming ASEAN One Market in January 2015 will bring competition into the market. The OJK has declared that only three sectors of the general insurance industry will be open to non-Indonesian companies; namely marine insurance, marine hull insurance and aviation insurance. Property and motor vehicle insurance for example will not be open to ASEAN investors so while there will be increased competition, we are confident in our positioning.

What are your hopes for the new administration when it comes to making improvements in Indonesia’s financial sector?

We hope that the new administration will raise the allowed capital of insurance companies to up to 250 billion RP from 100 billion RP so that we can compete with companies from Singapore for example. The current capital limitation is too low. Micro-insurance is a further area that we would like to see the OJK concentrate on. Our plan is to market these micro-insurance products to middle class individuals starting with employees of the Bosowa Group in South Sulawesi.

What can you tell us about your strategy for the future expansion of Bosowa Asuransi?

We are from the East of Indonesia and Bosowa’s automobile division monopolises the coverage for Mitsubishi in this region; many companies have gone after this area in the past and not succeeded. From 2013, we have targeted that 50% of the Mitsubishi automobile insurance market will go directly to Bosowa Asuransi; previously it was very low at just 2%.

We also have the second largest cement factory in Indonesia which was previously insured by various companies. From 2013, 50% of the factory is insured by us. Within the Bosowa Group, the coverage provided by outside companies stands at 80% and 20% is covered by us. Over the next two years we plan to increase this to an overall figure of 50% of all assets to be covered by Bosowa Asuransi and 50% by providers not from within the group.

I also see health insurance as becoming a very important area in Indonesia’s general insurance sector. At the cement factory and at Bosowa Auto there are a large number of employees so in 2013 we began offering health insurance as we already have the license. The potential premiums are very high in the health insurance segment. Currently we have reached a premium of 50 billion RP so while it is a new business segment, it has grown well. Less than 5% of Indonesians have health insurance so there is a lot of potential for the future with the introduction of BPJS who we have formed an agreement with to grow our market share in cooperation with them.

In terms of innovations, we have created our new product which is called B-Shield which offers personal accident insurance in addition to providing bundled products such as person accident with automobile insurance. Also, we have introduced B-Bond for bond insurance to further increase our market share. In 2015 we are expecting 20% growth.

How is the company positioned for partnerships and joint ventures within international insurance players looking to enter the Indonesian market?

Partnerships are very important as insurance is all about the spreading of risk. Capital is still not adequate in Indonesia, even if all the companies are taken together so at Bosowa we have relationships with reinsurance companies in North America, Europe, Singapore and many more. For the future we are increasing our portfolio target by offering new products.

Our shareholders are very open to new opportunities. Bank Kesawan is a bank in our group and they recently formed a partnership with Qatar National Bank. I believe for insurance they would also be open for the same types of opportunity. As Indonesia is part of the ASEAN, in 2015 there will be even greater competition in the insurance sector, so we need to form international partnerships to increase our capital and strengthen our internal capacity.

Bosowa Group has shares in over 43 companies so this makes us a very attractive proposition as investment partners have access to opportunities in many sectors of the market once they invest with us. Our interest is therefore in capital but also knowhow in order to enable the company’s growth.

Education and knowledge transfer is the priority for us in terms of international cooperation. We can learn about the insurance sector while providing access to business opportunities in the Indonesian market to our partners.

What do you identify as the main challenges currently facing the company?

Distribution channels are a challenge in Indonesia due to the size of the country. In 2013 we opened five new branches nationwide across the main islands. Being part of the same group as Bosowa Motors and Bosowa Cement means that we already have branches across the country but qualified human resources can be a challenge. New distribution channels are therefore an area that we want to explore.

What should potential partners and investors remember about Bosowa Asuransi as a final message?

Bosowa Asuransi is a locally owned company which is owned by individuals as opposed to overseas partners or the government which is often the case for other insurance companies in Indonesia. This is what potential partners and investors should remember as our status means that we offer an excellent opportunity for entering the Indonesian market.

Indonesia is a rapidly growing country with a low rate of general insurance penetration. There is still a lot of potential to be realised and we hope to do this with partners from overseas.