AAJI expects 43% growth in premium revenue

The Jakarta Post ,  Jakarta   |  Fri, 09/14/2007 2:37 PM  |  Business

The Jakarta Post, Jakarta

The Indonesian Life Insurance Association (AAJI) is expecting a 43 percent increase in new insurance premium revenues to Rp 23 trillion (around US$2 billion) this year from Rp 16.07 trillion last year.

AAJI executive director Eddy KA Berutu said Wednesday that the forecast was realistic considering the good results achieved in the second quarter of the year.

He said that new premium revenue increased in the second quarter by 85 percent to Rp 11.87 trillion from Rp 6.41 trillion in the same period of 2006.

Of the Rp 11.87 trillion, Rp 5.2 trillion was collected from individual customers, Rp 2 trillion from collective customers, Rp 4.55 trillion from unit-link customers and Rp 100.26 billion from annuity customers.

Eddy said that besides the increase in new premiums, the industry also enjoyed a 66 percent increase in renewal premiums in the second quarter, up to Rp 6.39 trillion from Rp 4.23 trillion in the same period last year.

As a result, he said, total premium revenue in the second quarter increased by 66 percent to Rp 18.27 trillion from Rp 11.01 trillion in the same period last year.

""This premium revenue growth resulted from the improvement of people's awareness about the importance of life insurance, the good macroeconomic conditions, the introduction of more innovative products and the expansion of distribution lines by the insurance companies,"" Eddy explained.

Besides the growth in premium revenue, the industry also reported an 80 percent increase in non-premium revenue, up to Rp 4.30 trillion in the second quarter from Rp 2.38 trillion in the same period last year.

The non-premium revenue was dominated by investment revenue, which grew by 86 percent to Rp 4.08 trillion from Rp 2.19 trillion in the same period last year.

The total revenue in the life insurance industry, both from premium and non-premium income, rose by 61 percent to Rp 23.04 trillion in the second quarter from Rp 14.35 trillion in the same period last year.

The industry's total assets, meanwhile, rose by 45 percent to Rp 82.06 trillion as of June from Rp 56.73 trillion as of the same month in 2006.

Eddy said that total investment saw a Rp 24.3 trillion increase to Rp 72.91 trillion as of June from Rp 48.58 trillion as of the same month in 2006.

He explained that of this total, Rp 34.08 trillion was invested in stocks, Rp 17.53 trillion in mutual funds, Rp 9.68 trillion in time deposits, Rp 4.32 trillion in Bank Indonesia promissory notes (SBI) and Rp 3.8 billion in direct investments.

The total amount paid out on insurance claims rose by 17 percent to Rp 8.19 trillion in the second quarter.

Eddy said that the figures were based on reports filed by 43 life insurance companies, consisting of one state-owned enterprise, 27 private firms and 15 joint ventures.

They reported that they had 7.1 million individual policy holders and 30.5 million collective policy holders, meaning that only some 17.09 percent of Indonesia's 220 million people are insured. (14)

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