Definition and History of Insurance in Indonesia

 

Definition of InsuranceThe primary function of insurance is as a mechanism to transfer risk (risk transfer mechanism) , which transfer risk from one party ( the insured ) to another party ( the insurer ) . The transfer of risk is by no means eliminates the possibility of misfortune , but the insurer to provide financial security ( financial security) and tranquility ( peace of mind ) to the insured . In return , the insured pays a premium in a very small number when compared to the potential losses that may be suffered ( Morton : 1999) .



Basically , the insurance policy is a contract that is a valid agreement between the insurer ( in this case the insurance company ) with the insured , where the insurer is willing to bear some losses that may arise in the future in return for payment ( the premium ) from the particular insured .
According to Law No. . 2 of 1992 , which referred to the insurance or coverage is an agreement between two or more parties , by which the parties committed themselves to the insured , by accepting the insurance premiums to provide reimbursement to the insured for loss , damage or loss of expected benefits , or legal liability to third parties which may be suffered by the insured , arising from an uncertain events , or to provide a payment based on the death or life of an insured person .
In order for a potential loss ( which may happen ) can be insured ( insurable ) then it must have the following characteristics:The loss of uncertainty ,Losses should be limited ,Loss must be significant ,Loss ratio can be predictable andLoss is not catastrophic ( disaster ) for the insurer .The question arises ; death is a sure thing , why be insured ?Even though it is something that contains certainty , but the exact date when the person's death are beyond the control of that person . So when the events truly death of uncertainty is what causes it insurable .
There are two forms of agreement in determining the amount of the payment at maturity of insurance namely : contract value ( valued contract) and the indemnity contract (contract of indemnity ) .
The contract is an agreement whereby the value of the payment amount has been determined in advance . For example , the sum assured ( UP ) on life insurance .
Indemnity contract is an agreement santunannya amount based on the amount of actual financial loss . For example , the cost of hospital care .
In the case of insurance companies trying to suppress the possibility of a fatal loss / large , it can transfer risk to another insurance company . This is called reinsurance companies that accept named reinsurers .
In addition to the five characteristics above , before it can be insured , the insurance company should consider the insurable interest and anti-selection . Insurable interest with regard to the relationship between the insured and the recipient of compensation / benefits - in terms of loss potential . For example, the insurance company will not sell fire insurance policy to a person other than the owner of the building is insured .
Insurable interest in this example is the ownership of an eye something that is insured .Similarly, family relationships , financial linkages are unwarranted , is also a form of insurable interest . The definition of anti-selection ( counter selection ) refers to the existence of a greater tendency to take insurance because it has a risk level above the average . For example, people who have a record of poor health or risk dangerous jobs tend to want to buy insurance .
To reduce anti-selection result , the insurance company must be able to identify and classify potential risks or losses . The process of identification and classification of the level of risk is called underwriting or risk selection . But that does not mean anti-selection led to the filing of insurance is rejected , because the risk of loss to the insured than average can be charged a premium sub- standard ( special premium ) due to sub- standard risk ( specific risk ) unless the possibility of loss is much higher , may request denied insurance .

History of Insurance in Indonesia
Insurance business into Indonesia during Dutch colonial rule and our country at that time called the Netherlands East Indies . The existence of insurance in our country as a result of the success of the Dutch nation in the plantation sector and trade in the colonies .
To ensure its survival , the presence of insurance is absolutely necessary . Thus the insurance business in Indonesia can be divided into two periods , namely the colonial period until 1942 and the period after World War II, or the time of independence .
At the time of the Japanese occupation army for about three and a half years , almost no recorded history of the development .
Insurance companies in the Dutch East Indies colonial era it is :The companies founded by the Dutch .The companies that are branch office of the insurance company headquartered in the Netherlands , the UK and in other countries .
With a run monopoly system in the Dutch East Indies , the development of insurance in the Netherlands East Indies limited to trade activities and interests of the Dutch , British , and other European nations . And the role of insurance benefits have not been recognized by the public , especially by indigenous communities .
This type of insurance that has been introduced in the Dutch East Indies at that time was very limited and mostly consists of fire insurance and freight .
Motor vehicle insurance is not yet play a role , because the number of vehicles is still very little and only owned by the Dutch and other foreign nation . In colonial times not recorded a single insurance company .
During World War II the insurance activities in Indonesia practically stalled , mainly due to the closure pemsahaan Dutch - owned insurance company and the UK .
Insurance independence eraAfter World War ended, the Dutch companies and the UK back in operation in this country has been independent . Until 1964 the insurance industry market in Indonesia is still dominated by foreign companies , especially the Netherlands and the UK .
At the beginning of their operations in Indonesia set up an entity called " Bataviasche Verzekerings Unie " ( BVU ) in 1946 , which conducts collective insurance . Thus from every closing , each member of the BVU gained a certain share . How this is done given the circumstances at the time the insurance is not organized and workers still less so .
In 1950 the company established a first loss insurance , the NV . Indonesia's airline insurance then in early 2004 has become a PT MAI PARK . At that time , as a pioneer of national insurance company first , these companies have to compete with foreign insurance companies that excel in both the capital and technical knowledge factor .
With the establishment of the national insurance companies , national businessmen bravery encouraged to establish insurance companies . Courage is also supported by government regulation that all imported goods must be insured in Indonesia . This arrangement is intended to address the use of foreign exchange to pay insurance premiums abroad .
In 1953 also established a national private company engaged in the reinsurance Dutch and English in Indonesia , the use of foreign exchange to pay reinsurance premiums abroad still remains large . To cope with this , was established in 1954 a professional reinsurance company , the " PT . REINSURANCE . GENERAL INDONESIA " which received support from state banks .
The latter institution issuing binding rules for foreign insurance companies to menggunakanjasa national reinsurance company . The steps taken by the government in this case give the expected results . PT activities . General Reinsurance Indonesia in 1963 expanded the life reinsurance activities .
At the time of PT . General Reinsurance Indonesia was established , many insurance companies have sprung up nationwide , but its development was hampered by severe competition from private insurance companies are foreign .
At the time of the struggle mengembaiikan West Irian to the Republic of Indonesia, the government nationalized the Dutch -owned company . British companies were nationalized in the confrontation .