Danantara Prepares a State-Owned Insurance Holding Company, Targeting the Remaining Three Companies

JAKARTA - Danantara Indonesia plans to form a State-Owned Enterprise (BUMN) Insurance Holding as part of the big agenda of transforming the national insurance industry. Later, only three main entities will remain.

Danantara Dony Oskaria's Chief Operating Officer (COO) said that the formation of this holding company was motivated by the still large amount of homework that must be corrected in the state-owned insurance industry, ranging from governance, risk management, to industry structures that are considered not efficient.

"This insurance, if I may say what it is, is one of the industries that we must improve in Indonesia," said Dony in a discussion event in Jakarta, Wednesday, January 28.

According to Dony, the national insurance industry has great potential, but until now it has not developed optimally.

In recent times, Danantara has been intensively discussing with the Financial Services Authority (OJK) to discuss improvements in the insurance sector, including corporate governance, risk management, potential systemic risks, and long-term growth opportunities.

Dony said that from the results of the mapping carried out, it showed that state-owned insurance companies faced complex and diverse problems.

Starting from a relatively small and inefficient business scale, to overlapping functions between insurance, surety, and credit risk financing.

Currently, continued Dony, there are around 15 insurance companies that have the BUMN label.

The government considers this number too high and inefficient to build a strong and competitive insurance industry.

"In the future, we have pushed for it to be done so that there will only be three insurance companies. Of course there will be life insurance, general insurance, and credit insurance," said Dony.

Dony emphasized that this consolidation step aims to create a state-owned insurance company that is larger in terms of assets and capital, more focused on running the business, strong in risk management, and able to compete at the national level.