New Policies a 23% Boost for Life Insurance Companies

By Francezka Nangoy


Life insurance companies’ revenues rose 23 percent in the first half of this year as more Indonesians took out policies for the first time.

Indonesia Life Insurance Association (AAJI), an industry group of life insurers said in a report released on Friday that revenues of 45 Indonesian life insurers rose by 22.9 percent to Rp 71.83 trillion in the first half this year, compared to the same period last year.

Revenue from premiums rose 14.5 percent to Rp 57.60 trillion in the first half, making up 80 percent of life insurers’ total revenues. Revenue from new premiums rose by 7.1 percent, while that from continued premiums rose by 31.3 percent.

The increase indicates more people are taking out new policies.

The number of insured people in Indonesia rose significantly by 54.6 percent to 87.19 million in the first half, AAJI head of communications Nini Sumohandoyo said in a statement.

"The increasing number of people covered by life insurance indicates improving public awareness about the benefits of life insurance," she said, but added that penetration rate is still very low.

Only about 5.3 percent of Indonesia’s 240 million people are insured individually. By comparison, Malaysia has a penetration rate of about 40 percent of its population, and about 30 percent Thailand’s population is insured, according to the national industry groups.

Meanwhile, insurance products linked to investment — called unit link — are one of the largest drivers of the industry’s growth.

According to AAJI chairman Hendrisman Rahim, unit link contributes 51.6 percent of incomes from new premiums and 62.3 percent of the income from continued premiums.

"Demand for unit link products is still relatively large because of its protection as well as investment benefit," he said.

Total yield on investment by AAJI members rose significantly by 78.4 percent to Rp 12.2 trillion amid volatility in the Indonesian capital markets, according to AAJI data.

Of a total Rp 245.18 trillion assets under management by life insurers, stock market investments rose 33 percent, mutual fund products grew 15 percent, while investment in debt papers soared by
118 percent.

These three instruments are insurers’ favorite investment destinations. Mutual funds comprise 30 percent of total assets, while stocks make up 29 percent and debt paper account for 25 percent.



Source: Jakata Globe