Asuransi Tugu urged to be transparent in its oil and gas insurance business

A number of insurance practitioners have urged PT Asuransi Tugu -- previously PT Asuransi Tugu Pratama Indonesia (TPI) -- to be more transparent in managing its captive oil and gas insurance market provided by state oil and gas firm Pertamina so that it will create fairer insurance pricing competition for oil and gas projects.

An insurance executive said that B. Munir Samsoedin, currently president of Asuransi Tugu, used to propose -- when he was not yet president of Asuransi Tugu -- that Asuransi Tugu should have implemented co-insurance principle through a consortium of insurance companies in giving insurance coverage for Pertamina's projects.

Munir even criticized the formation of the Consortium of Indonesian Insurance Industries (KPIAI) because - he argued -- it was TPI that dictated KPIAI and allocated insurance coverage portion to its members. Munir, according to the executive, branded that the KPIAI system was established by TPI to create an image that TPI did not anymore monopolize the oil and gas insurance business.

But later, when Munir became Asuransi Tugu president, he never implemented what he proposed about the co-insurance principle and even maintained the KPIAI system, the executive said.

Amiruddin Riayat, an executive at PT Asuransi Jasindo, also urged Asuransi Tugu to form a real consortium of insurance companies and implement the co-insurance principle as local insurance industry was currently waiting for Asuransi Tugu to materialize its promise to reduce its clout over oil and gas insurance business.

Meanwhile, Asuransi Tugu's technical director, Muhaimin Iqbal, acknowledged that his company was slow in implementing reforms because it was still dogged with internal problems. He noted that the company's insurance market share was depleting sharply following the dismantling of its monopoly rights over oil and gas insurance industry.

Asuransi Tugu, when it was still PT TPI, held the monopoly rights over providing insurance coverage for Pertamina's oil and gas projects. However, after the fall of former president Soeharto, Pertamina dismantled TPI's insurance monopoly rights.

TPI was formerly controlled by timber tycoon Mohamad "Bob" Hasan, a golfing buddy of former President Soeharto. However, Pertamina said that it had taken over Bob Hasan's ownership in TPI because Bob never submitted any fund for the shares in TPI. Pertamina then renamed TPI into Asuransi Tugu. (*)