A new regulation covering insurance for the export of coal and palm oil (CPO) as well as improving economic conditions are likely to boost transport insurance, including marine cargo insurance, at least until the end of 2018, says the Indonesian General Insurance Association (AAUI).
AAUI Executive Director Dody Achmad Sudiyar Dalimunthe assessed that transport insurance business could grow by up to 10% this year. This class of business is supported by regulations which make domestic insurance mandatory for the export of CPO, reports Kontan.
"This regulation has the potential to increase premium revenue from the transportation insurance business line when it comes into effect on 1 August 2018," Mr Dody said.
However, so far, export transport activities are still dominated by foreign insurance companies, because the system uses the free on board (FOB) mode. Under this, obligations, costs, transportation and risk of delivery of goods is borne by the buyer.
So far, oil palm and coal exports mostly use FOB trading schemes, and overseas buyers decide the insurance, he explained.