KUALA LUMPUR, May 5 -- AM Best believes the Indonesia Government’s establishment of an insurance holding company will likely lead to greater corporate governance of government-owned companies in the country’s insurance industry.
According to a statement, Indonesia’s Ministry of State-Owned Enterprises is in the process of establishing an insurance holding company, to be led by state-owned investment holding company, PT Bahana Pembinaan Usaha Indonesia.
A new Best’s Commentary, titled, ‘Indonesia Strengthens State-Owned Insurers with Holding Company Formation’, states that in general, state-owned enterprises form an important pillar of emerging markets, serving as drivers of economic and strategic interests.
The entity aims to improve the efficiency of Indonesia’s state-owned insurers and enhance the quality of risk management and supervision, as well as provide financial support to distressed state-owned life insurer PT Asuransi Jiwasraya (Jiwasraya).
AM Best expects the setup of the new insurance holding company to be a key solution in saving Jiwasraya, given that the funds channelled via the holding entity can help fulfil Jiwasraya’s policyholders’ obligations.
According to the commentary, greater operational scale and business complexity would invariably, require a more coherent and sophisticated approach to risk management.
Better transparency and improvements to financial reporting quality ultimately do not change the underlying fundamentals of an insurer, but a clearer picture of insurance companies’ operations is likely to emerge over time.
AM Best expects the push for improved risk management and corporate governance to pay off over the long term to pave the way for a more resilient insurance industry.
-- BERNAMA
No comments:
Post a Comment