Life insurance industry expects 30 percent growth this year

The Jakarta Post ,  Jakarta   |  Sat, 01/27/2007 3:53 PM  |  Business

The Jakarta Post, Jakarta

The country's life insurance industry is expected to grow by 30 percent this year, as compared to 20 percent in 2006, thanks to the overall improvement in the country's economy.

PT Asuransi Jiwa Central Asia Raya (CAR) president director Mulyadi Kusuma said he was upbeat that the improved economic situation, as reflected in lower inflation and interest rates, and a more stable rupiah, would boost the country's insurance industry.

""We're optimistic that this year's economic growth will reach 6.5 percent as targeted by the government because the real sector has also started to show signs of strength,"" he said as quoted by Antara.

The government is serious about reforming the economy by introducing new policy packages to attract foreign investors to do business here, he added.

In addition to cuts in Bank Indonesia's key interest rate, the central bank had also relaxed its rulings to encourage banks to increase lending.

In December last year, Bank Indonesia trimmed its interest rate by half a percentage point to 9.75 percent. With the lower rates, and the easing of the central bank's lending restrictions, commercial banks would have more leeway to increase lending, which will would in turn boost overall economic activity.

""Customers are very much concerned about interest rates. If rates continue to fall, the demand for insurance will rise,"" Mulyadi said.

CAR director Benny Syamsuddin said the company was looking to 25 percent growth this year as compared to 10 percent last year. He said he expected that the number of company policyholders would increase to 1.7 million this year compared to 1.4 million last year.

Benny said CAR had designed a number of new products in order to attract more customers. ""This is the right moment for us to improve our performance,"" he said.

The company expects to book premium income of Rp 829 billion (US$92 million) this year, a 27 percent increase from the Rp 650 billion recorded last year.

In 2006, the company's total assets stood at Rp 2.38 trillion, while total investment amounted to about Rp 2.23 trillion. Total reserves stood at about Rp 1.83 trillion, while profits amounted to Rp 83 billion.

Benny said CAR, which at present makes most of its profits from underwriting and investment, was awaiting the green light from BI and the Finance Ministry to move into the sharia insurance business.

""We have prepared everything for the new products, the offices, the human resources, the systems and the management,"" he said.

According to the Indonesian Life Insurance Association (AAJI), the industry had booked premium income of Rp 18.9 trillion (US$2.1 billion) as of the end of September last year, representing a 24 percent rise from the Rp 15.3 trillion booked in the same period of the previous year.

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