THE INSURANCE

MARKET
ANINDA NURUL SAVITRI (1306437725)
AULIA AKBAR FARRAS
DHIANTI AFIFAH (1306388521)
NADYA VERA MARGARETH (1306388622)
SYARIFAH REIHANA FAKHRI (1306388635)
STELLA AMABEL (1306437712)

INSURANCE MARKET
Marketplace is the place where goods
and services are bought and sold.
Where buyers and seller could freely
conduct business transaction with one
another.
In this respect, insurance market is no
different with any type of market.
Insurance market operates whenever
buyers and sellers happen to be

THE STRUCTURE OF INSURANCE

MARKET

BUYERS (POLICYHOLDER/INSURED)
INTERMEDIARIES
AGGREGATORS
INSURER
REINSURER

BUYERS

PRIVATE INDIVIDUAL
PARTNERSHIP
COMPANIES
PUBLIC BODIES
ASSOCIATIONS AND CLUB

INSURERS
a company wishing to transact insurance
must be authorized by the Financial Services
Authority (FSA)
The FSA term for this is insurance
undertaking
Financial Services and Markets Act 2000 and
with relevant European Union Directives
Insurance companies are required to
maintain defined level of solvency margins.

INSURER AS DEFINED BY
OWNERSHIP

Proprietary Companies
Mutual Companies
Mutual Indemnity
Associations
Captive Insurance
Companies

INSURERS AS DEFINED BY
FUNCTION

COMPOSITE COMPANIES
SPECIALIST INSURANCES

LLOYDS MARKET
What is Lloyds market?
Lloyds is an institution that provides
facilities for the placing of risks in its
own market.
Lloyds is not a company, but a
market where the members join
together as syndicates to insure
risks.

SYNDICATES
What does syndicates mean in Lloyds
market?
Syndicates are the groups of
individuals or corporate members
who actually carry the risks of
investment.
Each Syndicate employs managing
agent who manages the underwriting
of one or more syndicates.

How Lloyds Market Work

ACCESSIBILLITY TO THE LLOYDS

MARKET
Before 2008, only Lloyds brokers can place business at
Lloyds.
After the Legislative Reform Order 2008 came into
place, no such rule is in effect anymore.
In addition to that, Lloyds has published guidance to
the market on dealing with non-Lloyds brokers.
These changes allow Lloyds to develop its distribution
strategy free of statutory provisions that do not apply to
competitors.

LONDON MARKET
The London Insurance Market is a separate part
of the UK insurance and reinsurance sector.
The main providers in this market are insurance
and reinsurance companies, Lloyds syndicates,
Lloyds service companies and protection and
indemnity clubs.
It is the place where many sizeable or complex
industrial risks from all over the world are placed.

CONTRACT CERTAINTY
London Market Principles (LMP) are specific
procedures designed to ensure that all parties are
fully aware of the coverage and terms of the
policy, before taking a risk starts to be covered.
This term are more widely known as Contract
Certainty.
Contract Certainty is achieved by the complete
and final agreement of all terms between the
insured and insurers before inception.

HOW LONDON MARKET WORK

INTERMEDIARIES
In legal terms, the customer is termed the
principal, who hires an agent. To reach a
contractual relationship between them, the
help of intermediaries, or the third party is
required.
Intermediary parties must adopt the status of
an Appointed Representative(AR) or
Introducer Appointed Representative(IAR)
that has equivalent rules to those of the FSA.

APPOINTED
REPRESENTATIVE
ARs are individuals or companies that
are appointed by authorised parties
under the terms of a contract.
An AR may act for more than one
principal, provided that there is a
suitable contract in place with each
one.

INTRODUCER APPOINTED
REPRESENTATIVE
An Introducer Appointed
Representative is one whose scope of
appointment by the authorised party is
limited to effecting introductions and
distributing what are termed non-real
time financial promotions.

SERVICES PROVIDED BY INTERMEDIARIES

Deciding the best market in which to place the risk;
Negotiating terms and conditions
Providing advice to the client
Reviewing Client needs
Risk Management Advice
Assisting with the presentation of claims and recovering
losses

F. Distribution Channels

Why Is Insurance Distribution

Important?
Marketing mix: the marketing
process that involves decisions on
product, price, promotion and place.
The distribution of insurance is a
very important component of the
marketing mix because the choice of
distribution channel will affect pricing
and may even impact upon the
shape of the product or its
presentation.

Two Types Of Distribution Channels

1. Direct distribution channel
. Employees of insurer sell the insurance
products
. Direct mailing techniques
2. Indirect distribution channel
Intermediaries paid by the insurer to
promote products on the insurers behalf
i.e.: agents, brokers, consultants or
advisers.

Direct Marketing Channels

Advantages

Disadvantages

For Insurers

Reduced costs for

insurers
Because no
intermediaries are
needed

Significant advertising
and promoting costs

For Buyers

Greater ease and

speed for buyer to
obtain insurance

There is only one

companys product
available, unless
several telephone
calls are made
There is no
independent advice
available regarding
suitability and no

Indirect Marketing Channels

Advantages
For Insurers

Disadvantages

The intermediary will

More cost needed for
earn commission,
paying intermediaries
resulting in an incentive
to sell the product on the
insurers behalf, and the
insurer benefits from any
promotional activity
Independent
intermediaries will
provide advice to their
client (the buyer) about
a whole range of things
(best premiums and best
range of cover). This
benefits the insurers
that are being advised to
clients.

For Buyers

There is independent
advice available

Less ease and speed to

obtain insurance

Insurance Distribution Channel in

the UK
1. Direct
Direct marketing
Online distribution
Company sales staff
Home service agents

2. Indirect
Distribution agents
Distribution brokers
Consultants or advisers

Insurance Distribution Channel in

Indonesia
1. Direct
Direct marketing
Online distribution

2. Indirect
Distribution agent
Distribution broker
Bancassurance distribution

Distribution Channel in the

Indonesian Insurance Law (Law
No. 40 year 2014)

An insurance broker is recognized under

the Indonesian Insurance Law (Law No. 40
year 2014)
An insurance broker must be registered by
the Financial Services Authority/OJK (art.
27)
The payment of a premium by an
insurance company may be paid directly to
the reinsurer, or paid through a
reinsurance broker firm. (art. 29 (2))

G. Aggregators

Aggregators
An aggregator collects and analyses
information from different data sources.
It is the term used for information
retrieval for goods and services on the
internet -> web based extraction tools
that facilitate gathering information
from different sources, without the
permission or knowledge of the data
source.

How Do Aggregators Work?

In the aspect of
insurance, market
aggregators cooperate
with intermediaries and
insurers to access their
pricing for different risks.

They provide a set of

quotations from a
number of insurance
providers for buyers
in their own website

The buyer then can

approach the
insurance company
and purchase their
insurance at
competitive rates.

Example
www.comparethemarket.com

Aggregator
in the UK vs in Indonesia
Aggregators are recognized in the
UK, as there are many aggregator
media in society.
Aggregators are a newly recognized
tool in Indonesia, with the increasing
number of Indonesian aggregator
media.

H. Reinsurance

Reinsurance
Like individuals, corporations and public
bodies may feel the need to transfer
risk, so do insurers.
Then, this is done by using the services
of reinsurers.
Reinsurers are often limited liability
companies.
Reinsurance is found in both the UK and
Indonesia.

Purpose of Reinsurance
1. To smooth out the highs and lows of the claims experience
Reinsurance helps by spreading the cost of very large losses
over a period of time.
2. To provide improved customer service
Reinsurance enables insurers to accept much more than
their own net capacity, especially with large risks.
3. To protect the portfolio of an insurance company
Insurers to protect the effects of very large losses arising
from a single cause. i.e. weather related claims
4. To provide support for insurers entering new areas of
business
Special agreements between insurers and reinsurers exist in
situations when insurers decide to begin a new class of
business to provide automatic facility and extra capacity

Reinsurance in the UK
The UK has a long-established reinsurance market
with Llyods market having renowned expertise in
placing reinsurance business.
Reinsurance is governed under the Financial Services
and Markets Act 2000 (FSMA).
There are two separate authorities responsible for
regulating insurers and reinsurers:
The Prudential Regulation Authority (PRA): supervises
prudential issues;
The Financial Conduct Authority (FCA): supervises conduct.

Permission of reinsurance companies are granted

under Part 4A of FSMA where both the PRA and FCA
are satisfied the applicants meet various minimum
threshold conditions.

Reinsurance in Indonesian Insurance

Law (Law No. 40 year 2014)
Reinsurance is recognized as one of the insurance
business. (art. 1 point 4 Insurance Law)
Reinsurance Brokerage Business is a consulting
service business and/or intermediary in the placement
of reinsurance. (art. 1 point 14 Insurance Law)
The business scope of reinsurance is the risk of
another insurance company. (art. 2b)
A reinsurance company can only organize a
Reinsurance Business (art. 2 par. (3))
The Ministry of Finance determines the general policy
for the development of the use of insurance and
reinsurance (art. 57 (2))
The Financial Services Authority/OJK controls and
manages reinsurance (art. 65)

Types of Reinsurer in the UK

Specialist reinsurance companies
Lloyds syndicates
Insurance companies that also act as
insurers
They provide reinsurance for:
Insurance companies
Lloyds syndicates
Other reinsurers

Process of Reinsurance
Buys insurance

Buys reinsurance

Reinsur
er

Insurer
Reinsuring

Retroceding

Reinsur
er

Professionals in Insurance

Underwriters
Main Functions:
Assess the risk that people bring to the
pool
Decide whether or not to accept the risk
Determine the terms conditions and
scope of cover to be offered
Calculate a suitable premium to cover
expected claims, provide a reserve,
meet all expenses and provide a profit.

Claims Personnel
Deal quickly and fairly with all claims
submitted
Be able to distinguish between real and
fraud claims
Assess the cost of a claim so realistic value
is placed upon it priot to payment
Determine whether others, such as loss
adjusters, need to be involved
Be able to settle claims with the minimum of
wastage

Loss Adjusters
Loss adjuster is an expert in processing claims from start to
finish. Straightforward small claims are usually negoriated and
settled by in house claims staff, but larger claims are handled by
loss adjusters.
They investigate circumstances surrounding a claim
Determine whether and to what extent the policy covers the
loss
Facilitate any emergency measures, eg. For the protection of the
property
Negotiate amounts claimed
Negotiate specialist suppliers
Make reccomendation for settlement to insurer.
Their aim is to negotiate a settlement that is fair to both insurer
and insured

Loss Assessors
Experts in dealing with insurance
claims
Appointed by an insured to prepare
and negotiate claim on their behalf.
Their fees are paid by the insured but
these costs do not form part of the
insures claim and cannot be
recovered from the insurer

Surveyors and those providing

forensic services
Risk assessment.
Determine exact cause of loss or
damage
Establish seat of fire and its origins
Determine whether there is fraud or
deliberate act
Determine whether any lack of
maintenance contributed to damage
Determine proximate cause

Actuaries
Professionally qualified people who
applies probability and statistics to
problems of insurance, investment,
financial and risk management and
demography.
Techniques applied by actuaries
include the probability of loss and
prediction of claim numbers and
future values.

Risk Managers
The systematic identification,
analysis and economic elamination
or control of risks that threaten the
business
Provides guidance on the best
practice in these areas to
management
The transfer of appropriately
identified risks by contract or
insurance.

Compliance Officers
Ensure that their firm abides by the rules and
regulations set down by the FSA.
Communicates the companys policy to members of
staff, including the organization of any associated
training
Complete returns regularly required by FSA for
governance financial and complaints
Reviewing business process to ensure they are
appropriate and compliant
Maintain the companys compliance manual
Checking that all stages of business process are being
performed in accordance with the compliance manual.

Relation to Law no. 40 /

2014

CHAPTER XII
PROFESSIONAL SERVICE PROVIDER FOR INSURANCE COMPANIES
Article 55
(1) Professional services provider for the Insurance Company consists of:
a. actuarial consultants;
b. public accountant;
c. Assessor; and
d. Other professions are defined by the Financial Services Authority
Regulations.
(2) To be able to provide services for the Insurance Company, provider of
professional services referred to in subsection (1) must be registered in
the Financial Services Authority.
(3) Further provisions on the requirements and procedures for registration
of professional service providers referred to in paragraph (1) and (2)
regulated in the Financial Services Authority

Market Organizations
There are 10 Market
organizations

Association of British
Insurers (ABI)
The ABI represents the collective
interests of the UKs insurance
industry. The Association speaks out
on issues of common interest, helps
to inform and participate in debates
on public policy issues, and also acts
as an advocate for high standards of
customer service in the insurance
industry.

International Underwriting
Association of London (IUA)
The IUAs mission is To promote and
enhance the business environment
for international insurance and
reinsurance companies operating in
or through London.

British Insurance Brokers

Association (BIBA)
BIBA Mission Statement
To represent and protect the
best interests of our insurance
broker and intermediary
members.

London Market Regional Committee

(LMRC)
It aims to provide a strong voice on
behalf of BIBAs London market
broker community to the Financial
Services Authority, European
regulators, the Government and
other stakeholders.

London and International Insurance

Brokers Association (LIIBA)
LIIBAs Mission is to ensure that
London remains where the world
wants to do business by continuing
the transformation of market
processes and maintaining the
highest professional standards.

Institute of Insurance
Brokers (IIB)
The IIB was formed in 1987 as a
professional association for over
1.000 insurance broking firms
throughout the UK. It is a trade body
and represents its members interests
to Government, regulatory
authorities, the EEA commission and
other relevant bodies worldwide. It is
a non profit distributing organization,
limited by guarantee

Lloyds Market Association

The purpose of the LMA is to identify
and resolve issues which are of
particular interest to the Lloyd's
market. We work in partnership with
the Corporation of Lloyds and other
market-related associations to
influence the course of future market
initiatives.

Chartered Insurance
Institute (CII)
The CII works hard to maintain public
confidence and trust in the financial
services market.

Chartered Institute of loss Adjusters

(CILA)
The role of the Chartered Institute of Loss Adjusters
The Institute plays a pivotal role in leading the profession in
the UK and overseas. With the backing of its members it
ensures that the profession receives the high profile
recognition it deserves.
The Institute is self-regulating and totally committed to its
core values of standard setting, examination and professional
conduct.
The Institute helps to shape the future of the profession.
Its Committees and Specialist Interest Groups address key
issues facing members and act as hubs disseminating
information. It also has regular contact with National and
European Government bodies and other insurance and
business associations.

Faculty and Institute of

Actuaries
Actuaries provide commercial,
financial and prudential advice on
the management of assets and
liabilities especially where long term
management and planning are
critical factors

Insurance Organizations in
Indonesia

Insurance council of Indonesia

(Dewan Asuransi Indonesia)
DAI consists of all insurance companies, life insurance
and reinsurance that has a business license in Indonesia.
Although there is no law that such requires, it become an
unwritten agreement that all companies must be
members of DAI. DAI contained Losses Division, Life
Division and Reinsurance Division.
DAI duties as defined in Article 7 of the Articles of
Association are:
- Continuous education in order to establish an Insurance Human Resources quality.
- Carrying out research and development activities that benefit members and insurance business
- Managing publications in the field of insurance in order to improve the quality of human resources
of the Insurance and increase insurance awareness of society.
- Coordinate cross-association and,
- Other tasks deemed important and Necessary by the board based on the development of insurance
business

Members of DAI
Asosiasi Asuransi Umum Indonesia (AAUI) such as PT.
Allianz Utama Indonesia, PT. AXA Indonesia
Asosiasi Asuransi Jiwa Indonesia (AAJI) such as PT.
Prudential Life Assurance, PT. Commonwealth Life
Asosiasi Asuransi Jaminan Sosial Indonesia (AAJSI)
such as PT. Jasa Raharja, PT Asabri
Asosiasi Penilai Kerugian Asuransi Indonesia (APKAI)
such as PT Adjusterindo Pratama, PT. General Adjuster
Indonesia
Asosiasi Perusahaan Pialang Asuransi & Reasuransi
Indonesia (APPARINDO) such as PT. Asia Finance Risk, PT.
Adi Pratama Asia
Asosiasi Asuransi Syariah Indonesia (AASI) such as PT.
Asuransi Central Asia, PT. Asuransi Sinar mas

Extraordinary Member
Indonesia Insurance Senior Executive
Association (ISEA)
Asosiasi Ahli Manajemen Asuransi
Indonesia (AAMAI)
Perhimpunan Ahli Manajemen
Kesehatan Indonesia (PAMJAKI)

 Asosiasi Broker Asuransi Indonesia (ABAI) consists

of all Brokerage firm companies that have a business
license in Indonesia.
Asosiasi Perusahaan Adjuster Indonesia (APAI)
consists of all Loss Adjuster companies that have a
business license in Indonesia.
Asosiasi Ahli Manajemen. Asuransi Indonesia
(AAMAI) Consists of professional (individual) who hold
or holds a professional in the field of insurance. AAMAI
establishment is to comply with the legislation with
respect to the requirements of experts must be
employed by all insurance companies , in headquarters
and branch offices