JAKARTA: The ratio of reinsurance premiums paid by national general insurance companies to foreign reinsurance are declining in the last 5 years.Based on Bapepam-LK data, the ratio between the amounts of reinsurance premiums paid to foreign and general insurances direct premium income reached 48% in 2006 then slipped to 40% in 2010.Such condition is a reflection that general insurance companies are trying to reduce risk-sharing to foreign reinsurance to manage it by themselves, Head of Insurance Bureau at Bapepam-LK Isa Rachmatawarta told Bisnis.Not only declining reinsurance premium ratio to foreign but also net funds ratio from foreign reinsurance and direct premium income, she detailed.International reinsurance deficit transaction ratio in 2006 recorded at 26% then decreased to 20% in 5 years. Deficit ration once reached 18% in 2009. The ratio shows the benefits insurance companies received from foreign reinsurance companies.Furthermore, she declined that nominal reinsurance premiums paid to foreign reinsurance were increasing following the growth in direct premium income of general insurance companies from year to year.National general insurance companies, she continued, are not prohibited from reassuring national business to international reinsurers, particularly engineering, satellite, oil and gas, aviation and hull businesses.Such businesses possibly only cover minimum 10% and 90% are forced to seek protection to foreign reinsurers.Regulator encourages insurance companies to manage their own insurance risk or share it with local reinsurance and other insurance companies.PrudenceNational insurance obligation to divide10% minimum risk to local reinsurance is not only to protect the industry but also as prudential measurement.Risk-sharing to local reinsurance companies also aims to increase the capacity, competence, and capability of insurance companies in managing risk. (19)(t05/msw)

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