Expanding Coverage
    Category: Companies & People By : Ardian Wibisono Read : 1574 Date : Monday, March 10, 2014 - 06:03:19

    Ahmad Zamroni / Forbes Indonesia

    In September, when Sompo Japan Insurance and Nipponkoa Insurance combine forces to create NKSJ Holdings, they will form the largest property and casualty (P&C) insurance company in Japan in terms of premiums. Last year, the joint holding company booked ¥3.3 trillion in premium income, with ¥1.9 trillion coming from the P&C business. However, with Japan’s population in decline and domestic competition rising, the company is looking abroad for new markets. In June, its subsidiaries in Indonesia merged ahead of the parent firm (the Mayapada group owns 20% of PT Asuransi Sompo Japan Nipponkoa Indonesia. Mayapada’s Dr. Tahir is a shareholder of the license to publish Forbes Indonesia). Visiting Jakarta in February, NKSJ Global Chief Executive Kengo Sakurada spoke with Forbes Indonesia about the growing importance of the Indonesian market and the company’s strategy going forward.


    What’s next after the merger?

    We have a strong will to expand overseas more in the coming years—particularly after the merger. There are three mega-insurance companies in Japan’s P&C market: NKSJ, Tokyo Marine and Mitsui Sumitomo. Together they hold 90% of the market. This means that the market is going to be more competitive, because the players are equally strong. On the other hand, in the insurance business, population matters: the number of buildings, houses, cars, or people with life insurance. Looking at Japan’s population trend, the answer is clear. Like it or not, to be sustainable you have to look for growth opportunities outside of Japan, or you have to find a green field for future growth inside Japan which is related with insurance.


    What are the opportunities?

    Insurance is our core business, but we can do something that is related to insurance, such as medical services, assistant services, or services related to the security or wellbeing of customers. We have about 20 million customers in Japan alone [and outside Japan, NKJS has about 3 million customers], and that could be the driving force to generate future revenue. More important is to look at opportunities overseas. We divide the world into two regions: developed countries such as the U.S. and in Europe, and emerging markets such as Southeast Asia. Moving into developed countries is less about growth and more about risk distribution. The business environment and market structure in developed countries resembles the Japanese market, but it is inversely correlated: if one goes up, the other goes down. That is why we are keen on finding well-managed markets in developed countries, which we did in December with the acquisition of London-based insurance firm Canopius for $1 billion. I think this will give us a strong platform for managing the insurance business in specialty markets.


    What about emerging countries?

    For future growth we need to look at Asian markets—particularly Southeast Asia. In the Chinese market, the opportunity is large but so is the uncertainty. Likewise, India is legally right but too big to move quickly. We already have a footprint in both countries. But for concrete growth, I think Southeast Asia has more of an edge. In all of Southeast Asia, I would pick Indonesia as the most promising country, not only for insurance but for other industries as well. Why? First, population matters. If you look at the size of the population here, 240 million is gigantic—twice as much as Japan—and the average age is 28 or below, so there is much room for growth. Second, there is a stable political regime. And third, Indonesia and Japan enjoy good relations.