Indonesia: Trade ministry hastens registration of insurers for coal exports
Source: Asia Insurance Review | Mar 2019
The Ministry of Trade has announced that there were 10 locally incorporated insurers at 11 February that had received approval to underwrite marine cargo insurance for the export and import of certain goods.
At 31 January 2019, only two insurance companies had such approval from the ministry, reported Kontan.
This is in relation to Indonesian insurance rules issued in mid-2018 that took effect on 1 February that require exporters of coal and palm oil to obtain cover from local insurers.
The new insurance rules had caused a substantial shipping backlog in Kalimantan, a major coal-mining region in Indonesia at the start of February. This was because some shippers had not complied with the new rule. At the same time, the registration of local insurers that underwrite the business had been slow or delayed. Previously, most of the coal was shipped on a free on board basis.
The 10 insurance companies at 11 February are expected to be joined by others. Indonesian General Insurance Association executive director Dody Achmad Sudiyar Dalimunthe said that there were 18 local insurers that met government requirements, based on 2017 financial statements. These already had a minimum equity of IDR500bn ($35.5m).
Meanwhile, there are 35 insurers which have formed a consortium to meet the minimum equity requirement.
To obtain a licence from the ministry, insurance companies must have a minimum paid up capital of IDR100bn and minimum equity of IDR500bn either individually or as a consortium. Among other requirements, the insurance companies must be able to build a system that is connected with Inatrade, the ministry’s online licensing system. A