Life insurers boost micro insurance to keep high growth

Local life insurance companies are providing more micro insurance packages with increasingly affordable premiums in order to be able to gain full advantage from the country’s large population, an insurance executive says.

Hendrisman Rahim, the chairman of the Indonesia Life Insurance Association (AAJI), said in Jakarta on Tuesday that many life insurance companies had designed special micro insurance packages targeted toward people in lower to middle-income thresholds.

 “In 2012, more life insurance companies will look to develop micro insurance, as it’s a market with potntial for expansion,” Hendrisman said during a seminar on the 2012 insurance outlook.

Hendrisman pointed out that with growth in the country’s economy, people’s buying power would also increase, meaning that the people who are now categorized as lower-middle class would become more important customers for them in the future.

He hoped the government would maintain economic stability, including keeping inflation low in order to make insurance products — especially those linked with investment — more attractive.

“A high inflation rate will lower the value of savings and make products like insurance less appealing,” he said.

In general, the insurance business would continue its robust growth next year, despite the economic slowdown due to the economic problems in Europe and the United States, he said.

The association estimates life insurance companies’ premium income will grow between 25 percent and 30 percent next year.

 “We forecast new premiums [new contracts] in the life insurance sector will reach Rp 65.75 trillion (US$7.18 billion), while the renewal of premiums [existing contracts] will reach Rp 27.03 trillion in 2012,” Hendrisman said.

He confirmed new premiums reached Rp 47.05 trillion by September this year and would reach Rp 55 trillion by the end of the year. Meanwhile, Hendrisman continued, the renewal premiums stood at Rp 20.02 trillion as of September and would exceed Rp 25 trillion by the end of the year.

According to Hendrisman, there are 41 life insurance companies and four reinsurers operating in Indonesia.

Chairman of the Indonesian General Insurance Association (AAUI), Kornelius Simanjuntak, said general insurance would also grow by two digits next year.

“We estimate that general insurance will grow about 15 percent this year and 17.5 percent next year,”
Kornelius said.

He cited the total premiums of general insurance reached Rp 15.72 trillion in the first half of 2011. An estimated 15 percent increase will bring the total premiums to around Rp 32.97 trillion by the end of 2011, while the total premiums in 2010 amounted to Rp 28.67 trillion.

According to Kornelius, 69 general insurance companies and 16 joint venture general insurers are currently operating in Indonesia. (rcf)