The reinsurance industry is expected to be disrupted by the spread of COVID-19 because of the dependence of reinsurers on primary insurers whose performance are expected to be hit by the pandemic.
Indonesian General Insurance Association (AAUI) deputy chairperson for statistics and research, Ms Trinita Situmeang told Kontan, “In the current conditions, reinsurers must tighten their cost structure so that they can meet their obligations to insurance companies, if these arise for insurance companies. Consideration must also be given to premium collection for cash flow management.”
AAUI data show that in 2019, the general reinsurance premiums grew by 20.2% to IDR17.04tn ($1.1bn) from IDR14.18tn in 2018.
AAUI executive director, Mr Dody Achmad Sudiyar Dalimunthe, said that motor and property insurance are still the dominant contributors to the total general insurance premiums. Both of these business lines contributed a combined 49.7% of the total general insurance premium income in 2019 that stood at IDR79.71tn.
“But it seems there will be a decrease in premiums for both business lines because of the impact of the spread of COVID-19.
“AAUI has not been able to calculate the numbers yet because it still hasn’t got the data for the first quarter of 2020,” he said.