Investment-linked insurance products will continue to drive up growth in the insurance industry, which next year is estimated to generate Rp 120 trillion (US$12.6 billion) in premium incomes, a grouping says.
The figure would represent a 20 percent growth from this year’s estimated premium income of Rp 100 trillion, Evelina Pietruschka, chairwoman of the Indonesian Life Insurance Association (AAJI), said on Tuesday.
Of the total revenue, more than half would come from unit-linked products, Evelina added.
In 2008, total premium income reached Rp 80 trillion.
“We cannot expect too much of a growth [from traditional insurance products] because the national insurance industry is now competing with fast-growing banking deposit products in attracting customers,” Evelina told a seminar on the 2010 Insurance Outlook.
In evolving new strategies to overcome these challenges, insurance firms are now focusing on improving the quality and range of life insurance products. In particular they are supplementing them by adding on additional value and benefits, to attract clients.
For example, some insurance companies have provided investment products where customers would be provided with life insurance combined with investment opportunities in time-deposits and other investment tools, she said.
Adi Purnomo, another chairman at AAJI, confirmed that nowadays it has become almost the norm for insurers to attract new customers by offering unit-linked products to give them more value-added benefits than a purely traditional insurance product.
“However, we also know that there are risks when it comes to investment. These investment-linked insurance products are sensitive for instance to the fluctuations in the capital market,” Adi said.
The AAJI is currently recording data showing that there are about 320,000 insurance agents working nationwide representing a total of 46 insurance companies. “We are targeting to hit 500,000 agents in 2012,” Evelina said.
Evelina said that she hoped the government would introduce more tax leeway for the insurance sector to help promote the future growth of the industry.
“If the government sets lower tax for us, we will also reduce the tax [payable from] insurance customers. That will definitely help boost this industry,” she said, adding that the sector had actually been growing very successfully and by double digits over the past five years.
And the growth trend would continue to persist, with the association predicting that the assets of the whole insurance industry, that is of all these 46 companies combined, would reach as much as Rp 500 trillion by 2014.
As of the second quarter of 2009, total industry assets hit Rp 121.2 trillion, which was 17 percent higher than the Rp 103.5 trillion recorded during the same period last year.
Meanwhile, the Indonesian Financial Services Association (APPI) secretary-general Dennis Firmansjah, who also attended the seminar, said that the overall financial services industry would expect to enjoy approximately between 15 percent and 20 percent growth in 2010.
Financial services companies, Dennis said, were eyeing to collaborate with insurance firms to boost the capacities of both industries. “For example, insurance companies can train their employees on how to market financial service products facilitated by APPI, or the other way around,” he said.
So that, he went on, companies from both sectors would then be able to provide joint products and the marketers from the firms in both sectors would be capable of promoting these products. (bbs)
