[Kajian Post] Capitalized Insurance company for the Betterment Nation

Oleh : Dwinia Emil | Trainee Kajian Kanopi 2012 | Ilmu Ekonomi 2012

It is alright to think that the world has gone too far capitalized—but we might as well realize how this on going system has helped our country in arriving and yet still emerging toward prosperity. Manage to take a look how powerful Indonesia’s role in the G20—we can ensure that we have sit our position, we have achieved the global recognition.

Here, insurance company may take a role in developing long-term growth prospects and in rejuvenating our investment climate. Last 2010, all insurers are expected to have at least 40 billion Rupiahs. The result was that the number that fail to meet this 2010 requirement was relatively small. Insurance companies are expected to meet 70 billion Rupiahs($7.7m) in capital by 2012 and 100 billion Rupiahs($11m) in capital by 2014, according to Oxford Business Group. We don’t know yet, but these are relatively tougher numbers. They might just as well become expected ever-higher, while companies with weak market position are likely to respond to this growing regulatory pressure by merging with a competitor or seeking an outside investor.

In addition, regulators (banks) are aware that only by raising minimal capital requirements they can manage to create Indonesian companies that are able to invest in their infrastructure. Each time this minimum capital level has been increased, companies have turned to their shareholders to (1) obtain more capital, (2) merged with other insurers to create a single, more capitalised company, or (3) decided to close shop.1 The impact was a slight fall in the total number of insurers on the market. However, this regulatory pressure to meet ever-higher capitalisation requirement will inevitably lead to further consolidation in the insurance market. Currently there are about 100 insurance companies in Indonesia and while the slight fall occured, those who remain are merging toward larger and more dominant industry.

Furthermore, depository institutions such as insurance company are part of the help of the nation development in terms of building infrastructure. If looking cautiosly at foreign investment, past investors are turning back into us after the 1998 financial crisis—again to state that we are achieving global recognition. The regulatory of increasing capital level will suggest insurers out looking for foreign investors. The good conclusion is here; Indonesia might just be an attractive targets for the investors looking to expand into new markets.

Source: The Report, Oxford Business Group

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