Life insurance more significant to Indonesians
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More Indonesians are taking out life insurance coverage, with the number of policies reaching 52.76 million by the end of the first quarter of 2012, up 15.1 percent, compared to the same period last year, the Association of Indonesian Life Insurance Companies (AAJI) said on Monday.
Corporate and individual markets accounted for 43.03 million policy holders and 9.73 million policy holders for the first quarter of 2012, respectively. AAJI chairman Hendrisman Rahim said that the increase reflected higher interest in life insurance among Indonesians.
“More and more people have realized the importance of owning a life insurance policy as a long-term security measure. Indonesia’s positive economic growth, despite the global crises, also plays a role in this figure because people’s buying power has also increased. Right now, traditional premiums dominate the market,” he said.
In the first quarter of 2012, AAJI members’ total revenues (combined premium and non-premium income), increased by 37.1 percent to Rp 33.05 trillion (US$3.50 billion), of which 65.5 percent derived from premium income.
Total premium income reported by the members between January and March 2012 rose to Rp 24.3 trillion, up by 14.8 percent over a year earlier. Of this increase, 68.31 percent came from new premiums. The renewal premiums stood at Rp 7.7 trillion, and unit linked products contributed to that amount with Rp 4.4 trillion.
Meanwhile, non-premium income increased almost six-fold, to Rp 8.75 trillion, with investments dominating 94.86 percent of the figure.
The AAJI report also showed that assets of member companies jumped to Rp 241.9 trillion, up 28.7 percent from the period of January to March 2011.
At the moment, the association’s membership comprises 45 life insurance companies and four
Hendrisman said that the association was expecting a 30 percent growth in total revenues by the end of 2012, to Rp 122.76 trillion.
Eddy K.A. Berutu, AAJI co-chairman of operations and administration, said that the insurance companies would try to cover more lower-income people by offering micro insurance policies for future customers in regencies and municipalities.
“The premium will be adjusted to these people’s income so that they can afford to take out life insurance,” he added.
Eddy said that members of the association also planned to increase the number of licensed insurance agents in order to expand their operations and reach the growth target.
“We are targeting 500,000 licensed insurance agents by 2014. Until March 2012, there were more than 274,000 agents operating in Indonesia. Last year we had about 220,000 agents. The number is still low for Indonesia’s population,” he added.
Based on a 2010 survey by the Central Statistics Agency (BPS), the total population stands at 237.6 million.
Hendrisman confirmed that in the first quarter of 2012, AAJI member companies’ payments of their clients’ total claims surged. The amount of payments rose 59.8 percent to Rp 14.5 trillion from the same period last year.
Nini Sumohandoyo, head of communications at AAJI, said that some of the claims were paid to the families of the 12 Sukhoi crash victims, who had taken life insurance from 12 AAJI members.
“We found out that 13 of the total victims had life insurance. So, in the first quarter of 2012, we completed the payments to 12 families with the amount reaching Rp 11.26 billion and $15,000. The last payment is ongoing,” she said. (tas)