T

he automotive insurance market has grown steadily during the past few years, in line with the rise of the automotive industry. However, competition is getting tougher as the number of companies entering this insurance market continues to increase from year to year.

According to the Association of Indonesian General Insurance Companies (AAUI), as many as 77 companies, or about 95 percent of existing general insurance companies, are competing in the automotive insurance market.

AAUI executive director Julian Noor said the automotive sector had become the jewel of the insurance industry since the 1980s when Japanese cars hit Indonesia.

Last year, that jewel shone even brightly when car sales hit a record high of 1.1 million units which contributed to an increase in the car insurance premiums. The motorcycle industry also made a significant contribution the general insurance companies’ premium income although motorcycle sales were affected by new lending regulations by the central bank.

As a result, automotive insurance premiums rose 13.3 percent to Rp 11.59 trillion (US$1.19 billion) in 2012. They remained the biggest contributor to the total premiums of the insurance companies, with 30 percent, followed by property with 28 percent and both health and personal accident with 13.3 percent.

This year, the AAUI is upbeat that automotive insurance will continue to grow, supported by higher car sales. The growth in car and motorcycle sales means that many insurance companies have entered this market segment because of the simplicity of the protection and the high premiums. “The coverage is not complicated. It mainly consists of comprehensive and total risk only [TLO],” he said.

That is why insurance companies are fighting to expand their market share. To ensure its dominance in the market, PT Asuransi Adira Dinamika (better known as Adira Insurance) has introduced a system to allow customers to file claims faster.

The company, a subsidiary of publicly listed Bank Danamon, has an app which allows customers to submit minor claims from their smartphones.

Automotives — cars and motorcycles — dominate Adira’s business portfolio at 65 percent. In 2013, the company wants 10 percent growth in automotive premiums to Rp 1.23 trillion.

PT Asuransi Allianz Utama Indonesia, part of the German-based Allianz Group, hopes to be among the top 10 firms in automotive insurance in the next few years. To reach the target, it is taking an unusual marketing approach, offering a new premium calculation to provide fair rates. The new calculation is based on the car’s model, value, and age.

“We found that there is a correlation between a driver’s behavior and the car that the driver chooses. At the moment, we have enough data for 10 different brands in Indonesia and certain cars turn out to have higher risks than the others,” he said.

In September 2012, automotive premiums amounted to Rp 116.32 billion from 23,882 policies. Allianz has not released its 2012 full year figures.

Another major insurer PT Asuransi Sinar Mas, popular for its Simas brand, also expects a double-digit increase in automotive business this year. The target is set at Rp 1.14 trillion, up 10 percent from 2012. A majority of the premiums will come from four-wheelers.

Sinar Mas director Aryanto Alimin says the company’s expansion strategies will include adding partners, opening more branches, direct business and intensifying the Simas Mobil Bonus program. The company will give bonus for customers who never submit claims over an eight-year period.