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Aug 23, 2023
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Abstract
In the heat of commission war in Indonesian General Insurance industry at the end of 2021, PT Asuransi Allianz Utama Indonesia (the company) took a bold maneuver to stop competing in the high-acquisition-cost market. The company did not stop operating, but consciously executing a significant downsize in targeting due to the exit from the unhealthy market in the motor and property line in Brokers and agency distribution channel. This brave retrenchment strategy resulted in a successful company turnaround in 2022. This study aims to evaluate the effectiveness of this maneuver as a best practice sharing in the industry that is very much needed. The novelty of this study is the first in Indonesian General Insurance retrenchment case. This study became urgent due to the company having made a successful turnaround and needing to decide on the strategy going forward. The method used is primary data interview and secondary data document review to create SWOT matrix analysis for strategy formulation. This study concludes that the retrenchment was a must do maneuver and very much aligned with the condition and strategy fit in the company. Aside from contributing to the company, this study could also contribute to regulator and players in the industry, as a real case example about walking away from saturated market and grabbing untapped opportunities by capitalizing one’s unique strength. It is a recommended strategy for the market players in Indonesian general insurance industry. Also, as the first study in Indonesian general insurance strategy, the implication of this study can become a trigger to a lot of strategic research in the vast Indonesian general insurance field.
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
How to Cite
Putra, D. S. (2023). Envisioning The Well-Being of Indonesian General Insurance: Reflecting from The Retrenchment Strategy of Allianz Utama 2022. International Journal of Multidisciplinary: Applied Business and Education Research, 4(8), 2775-2785. https://doi.org/10.11594/ijmaber.04.08.17
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Abidin, Z., Prabantarikso, R. M., Fahmy, E., Farhan A. (2022). Analysis of the efficiency of insurance companies in Indonesia. Decision Science Letters 11, 105–112
Adam, B., Wahyuni, S. (2019). Pengembangan Strategi Bersaing Dalam Meningkatkan Mutu Layanan Klaim. Jurnal Riset Perbankan Manajemen dan Akuntansi Vol 3 No 1, Januari 2019
Amani, Z., Markonah. (2020). The Influence of Premium Income, Underwriting and Investment Results on Profits Towards Joint Venture General Insurance Companies in Indonesia. Dinasti International Journal of Management Science, vol 1, issue 4, 2686-5211
Arintoko., Ahmad, A. A., & Habibah, S. N. (2021). Market Structure And Determinants Of Firm Profitability On General Insurance Industry In Indonesia. Studies In Business And Economics, 16(1), 26–41.
Azmi, F., Irawan, T., Sasongko, H. (2020). Determinants of Profitability of General Insurance Companies in Indonesia. Jurnal Ilmiah Manajemen Fakultas Ekonomi, vol. 6 No. 2, 135-144
Brahmana, R. K., You, H. W., & Kontesa, M. (2020). Does Ceo Power Matter For The Performance Of Retrenchment Strategy? Journal Of Strategy And Management, 14(1), 1–18. Https://Doi.Org/10.1108/Jsma-10-2019-0186
Husin, N. A., Kassim, A. A. M., & Rasli, S. (2021). Issues And Challenges Of Employee Retrenchment During Covid-19 In Malaysia. Hong Kong Journal Of Social Sciences. Https://Doi.Org/10.1037/Apl0000393
Imanipour, N., Jahandideh, A., & Davari, A. (2019). Exploring Turnaround Strategies In High-Tech Smes. Journal Of Entrepreneurship Development, 12(1), 1–19. Https://Doi.Org/10.22059/Jed.2018.252895.652502
Klyver, K., Nielsen, S. L. (2021). Which crisis strategies are (expectedly) effective among SMEs during COVID-19? Journal of Business Venturing Insights 16 e00273.
Kor, S. G. (2020). Investigation Of The Effect Of Short-Term Turnaround Strategies On The Survival Of Publicly Listed Small And Medium Enterprises (Smes). Retrieved From Https://Ro.Uow.Edu.Au/Theses1/771%0a%0a
Markonah., Sudiro, A., Surachman., Rahayu, M. (2019). The Effect of Corporate Governance and Premium Growth on the Performance of Insurance Companies in Indonesia. European Research Studies Journal, vol XXII, Issue 2, 359-375
Msinga, S. M. S., Ndinya, A., Ogada, M., & Omido, K. (2018). Differentiation Strategies And Performance Of Insurance Companies In Nairobi, Kenya. International Journal Of Advanced Research In Management And Social Sciences, 7(11), 15–29.
Miles, M. B., Huberman, A. M. and Saldana, J. (2014) Qualitative Data Analysis: A Methods Sourcebook. Sage, London.
Otoritas Jasa Keuangan. Peraturan Otoritas Jasa Keuangan No. 67/POJK.05/2016 tentang Perizinan Usaha dan Kelembagaan Perusahaan Asuransi, Perusahaan Asuransi Syariah, Perusahaan Reasuransi, dan Perusahaan Reasuransi Syariah [Financial Service Authority Regulation No. 67/POJK.05/2016 about Business and Institutional Licensing for Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies].
Otoritas Jasa Keuangan. Peraturan Otoritas Jasa Keuangan No. 69/POJK.05/2016 tentang Penyelenggaraan Usaha Perusahaan Asuransi, Perusahaan Asuransi Syariah, Perusahaan Reasuransi, dan Perusahaan Reasuransi Syariah [Financial Service Authority Regulation No. 69/POJK.05/2016 about Business Conduct of Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies].
Otoritas Jasa Keuangan. Surat Edaran Otoritas Jasa Keuangan No. SE-06/D.05/2013 tentang Penetapan Tarif Premi serta Ketentuan Biaya Akuisisi pada Lini Usaha Asuransi Kendaraan Bermotor dan Asuransi Harta Benda serta Jenis Risiko Khusus Meliputi Banjir, Gempa Bumi, Letusan Gunung Berapi dan Tsunami Tahun 2014 [Financial Service Authority Circular Letter No. SE-06/D.05/2013 about Premium Tariff and Provisions for Acquisition Fees in the Line of Business of Motor Vehicle Insurance and Property Insurance and Special Risks including Floods, Earthquakes, Volcanic Eruptions and Tsunami Year 2014].
Otoritas Jasa Keuangan. Surat Edaran Otoritas Jasa Keuangan No. 21/SEOJK.05/2015 tentang Penetapan Tarif Premi atau Kontribusi pada Lini Usaha Asuransi Harta Benda dan Asuransi Kendaraan Bermotor Tahun 2015 [Financial Service Authority Circular Letter No. 21/SEOJK.05/2015 about Premium or Contribution Tariff in the Line of Business of Property Insurance and Motor Vehicle Insurance Year 2015].
Otoritas Jasa Keuangan. Surat Edaran Otoritas Jasa Keuangan No. 6/SEOJK.05/2017 tentang Penetapan Tarif Premi atau Kontribusi pada Lini Usaha Asuransi Harta Benda dan Asuransi Kendaraan Bermotor Tahun 2017 [Financial Service Authority Circular Letter No. 6/SEOJK.05/2017 about Premium or Contribution Tariff in the Line of Business of Property Insurance and Motor Vehicle Insurance Year 2017].
Pemerintah Republik Indonesia. Peraturan Menteri Keuangan No. 74 /PMK.010/2007 tentang Penyelenggaraan Pertanggungan Asuransi Pada Lini Usaha Asuransi Kendaraan Bermotor [Ministry of Finance Regulation No. 74 /PMK.010/2007 about Implementation of Insurance Coverage in the Motor Vehicle Insurance Business Line].
Pemerintah Republik Indonesia. Undang-Undang Republik Indonesia No. 40 Tahun 2014 tentang Perasuransian [Law of Republic Indonesia No. 40 Year 2014 about Insurance]
Purnamawati, I. G. A. (2019). The Nexus Between Risk and Investment Factors on Insurance Companies Profit in Indonesia. Jurnal Riset Akuntansi dan Keuangan 7 (2), 379-388
Rico, M., Pandit, N. R., & Puig, F. (2021a). Sme Insolvency, Bankruptcy, And Survival: An Examination Of Retrenchment Strategies. Small Business Economics, 57(1), 111–126. Https://Doi.Org/10.1007/S11187-019-00293-Z
Rico, M., Puig, F., (2021b). Successful turnarounds in bankrupt firms? Assessing retrenchment in the most severe form of crisis. Business Research Quarterly 2021, vol. 24(2) 114-128
Salim, M. N., Sukarman. (2018). Factors Affecting Equity and Its Impact on Insurance Premium of General Insurance Companies in Indonesia. International Finance and Banking, vol. 5, No. 2
Septina, F. (2022). Determinant of Financial Performance for General Insurance Companies in Indonesia. Jurnal Ekonomi, Manajemen, dan Bisnis, Vol. 6 No. 1
Slobodianiuk, O., & Tolkacheva, G. (2018). Institutional Forms And Their Competitive Analysis Of Organization Of Insurance Activities In Ukraine. Economics, Ecology, Socium, 2(1), 99–110. Https://Doi.Org/10.31520/2616-7107/2018.2.1-9
Tao, Y., Xu, G., Liu, H. (2020). Compensation gap, retrenchment strategy and organizational turnaround: a configurational perspective. Journal of Organizational Change Management, vol. 33 No. 5, 925-939
Ung, L. J., Brahmana, R., & Puah, C. H. (2018). Defensive Strategy’s Effect on Firm Value: Evidence from Public-Listed Companies in Malaysia. Journal of Asia-Pacific Business.
Ung, L. J., Brahmana, R., & Puah, C. H. (2018). Firm performance, retrenchment strategy and different ownership structure: Evidence from public listed companies in Malaysia. International Journal of Business Science and Applied Management, vol. 13 issue 1,