JAKARTA. Banks with Core Capital over IDR 70 trillion or KBMI IV have insurance subsidiaries. The banks in question include PT Bank Rakyat Indonesia (Persero) Tbk (BBRI), PT Bank Mandiri (Persero) Tbk (BMRI), PT Bank Negara Indonesia (Persero) Tbk (BBNI), dan PT Bank Central Asia Tbk (BBCA).

Then, how huge is the contribution of insurance business in consolidated assets of jumbo banks? As quoted from the financial report yesterday (21/2), BRI owns 54.77% of a subsidiary called PT Asuransi BRI Life and 90% of PT BRI Asuransi Indonesia (BRI Insurance). BRI Life was reported scoring assets growth of 113.6% in the past 5 years. In 2019, the assets were IDR 11.08 trillion, while in late 2023, the assets grew to IDR 23.67 trillion.

Yearly, BRI Life’s assets rose 9.48% from 2022. In other words, it rose from IDR 21.62 trillion to IDR 23.67 trillion. Within this period, BRI Life’s profit increased from IDR 170.88 billion to IDR 360.46 billion, or shifting 110.94%.

BRI Insurance was also boosted over 100% within the past 5 years. In 2019, BRI Insurance was recorded having assets of IDR 2.66 trillion, which proliferated to IDR 6.4 trillion in late 2023. Compared to 2022, BRI Insurance’s assets also saw a significant surge from IDR 4.89 trillion to IDR 6.46 trillion, or shifting 32.1%. Furthermore, its profit also increased from IDR 479.37 billion to IDR 373.1 billion.

Bank Mandiri, another KBMI IV bank, also has its own insurance subsidiaries, PT Axa Mandiri Financial Services (AXA Mandiri) with 51% ownership and PT Asuransi Jiwa Inhealth Indonesia (Mandiri Inhealth) with ownership of 80%.

As recorded in late 2023, AXA Mandiri’s assets reached IDR 41.11 trillion, up 2.36% year-on-year (yoy) from IDR 40.16 trillion. The profit arrived at IDR 1.32 trillion, also growing from IDR 1.17 trillion seen in the previous year.

In the same period, Mandiri Inhealth recorded assets of IDR 2.82 trillion, increasing 4.36% yoy from IDR 2.7 trillion. Furthermore, its profit contributed IDR 175 billion, shifting positively from IDR 146 billion in 2022.

The next KBMI IV bank is BNI, with its insurance subsidiary called BNI Life. This state-owned bank controls 60% of BNI Life. At the end of last year, BNI Life’s assets clocked up to IDR 24.97 trillion, 7.07% higher from IDR 23.32 trillion at the end of 2022.

The last KBMI IV bank with its own insurance unit is BCA, the biggest private bank in Indonesia. It is known to manage its insurance subsidiaries, namely PT Asuransi Umum BCA (BCA Insurance) and PT Asuransi Jiwa BCA (BCA Life).

In 2023, BCA Insurance scored IDR 3 trillion of assets, up 23.6% yoy. With gross premium income of IDR 1 trillion, the company booked profit of IDR 178.6 billion.

Meanwhile, BCA Lifef has total assets of IDR 2.9 trillion, shifting 22.6% yoy. The gross premium income reached IDR 1.6 trillion in 2023, and profit before taxes clocked up to IDR 70 billion.

From these records, it could be concluded that insurance subsidiaries have yet to prove a significant role in 2023. For comparison, BMRI’s assets were IDR 2,174.2 trillion, growing 9.1% yoy. BRI also reported asset growth of 5.3% yoy to IDR 1,965 trillion, as did BCA by 7.1% to IDR 1,408 trillion and BNI by 5.5% to IDR 1,086.6 trillion.

Wahyudin Rahman, Lecturer of Risk Management, also the Head of Indonesia Insurance Writers Community, said that KBMI IV banks have a huge scale of business and a strong risk mitigation strategy.

“One of them is the risk transfer to insurance company. By managing its own insurance subsidiary, it will be easier for the bank to coordinate and monitor all captives, including users’ interests,” Rahman added.

Furthermore, Rahman mentioned that by owning its insurance unit, KBMI IV banks have easier access to consolidate and grow its revenue. “Money circulation regarding business must be priorities to subsidiaries first,” he explained.

However, Rahman said that within the past couple of decades, insurance subsidiaries always focus on serving business from their parent entities. “As of now, there is a need to promote cross-selling or expand to holdings of other groups, including private sector,” he concluded. (PP/ZH)