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Life insurers book positive results despite slow economy
Life insurance companies managed to book more than 10 percent growth in total revenue in the first half of the year, despite a decrease in premiums revenue due to unfavorable economic and political conditions
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ife insurance companies managed to book more than 10 percent growth in total revenue in the first half of the year, despite a decrease in premiums revenue due to unfavorable economic and political
conditions.
Indonesian Life Insurance Association (AAJI) chairman Hendrisman Rahim said on Monday that the economic slowdown and a 'wait and see' attitude among investors before the July presidential election had impacted the life insurance sector.
'However, customers' confidence and their awareness [about the importance] of insurance helped the industry to record a rise of 11.5 percent in total revenue to Rp 76.6 trillion [US$6.54 billion], up from
Rp 68.72 trillion in the same period last year,' he said at a press conference.
During the first half of this year, life insurers booked a combined Rp 54.58 trillion in total premiums revenue, down by 2.5 percent from the Rp 54.94 trillion recorded in the same period last year.
The negative growth was mainly caused by a 16.3 percent decrease in new customer premiums to
Rp 30.57 trillion in the first half, compared with Rp 36.52 trillion in the same period last year.
However, total premiums revenue from existing customers rose by 25 percent to Rp 23.01 trillion in the first six months of the year from Rp 18.42 trillion in the same period last year.
Hendrisman said the decrease in new customer premiums was primarily due to fewer purchases of single premium products, especially those linked to the capital market.
'We still believe that total premium revenue growth can reach 15 to 16 percent by the end of the year, as previous trends have shown that life insurance purchases tend to increase in the third and fourth quarters,' he said.
On the other hand, he added, investment return had reached Rp 20.78 trillion in January-June, a 75.8 percent increase from Rp 11.82 trillion in the same period last year.
- Economic slowdown, elections impact the insurance industry
- In H1, life insurers booked Rp 54.58t in total premiums revenue
- Total premium revenue is targeted to grow by 15% to 16% by year's end
The return was mainly contributed by a 30 percent placement in mutual funds, while 29 percent were in stocks, 23.8 percent in bonds, 14.7 percent in time deposits and the rest in property and other instruments.
'The high growth in investment return was influenced by positive trends in the capital market after recovering from sharp volatility last year,' Hendrisman added.
The growth in total revenue and investment returns contributed to the firm's total assets, which increased by 16.1 percent to Rp 299.2 trillion in the first half of the year, up from Rp 257.83 trillion in the same period last year.
Life insurers paid out Rp 32.80 trillion on total claims and benefits in the first half of the year, down by 1.4 percent from Rp 33.25 trillion in the same period last year.
AAJI's acting executive director, Togar Pasaribu, said the fall in claims and benefits had primarily resulted from a 14.2 percent decrease in surrendered claims and partial withdrawals in the first half to Rp 23.5 trillion, from Rp 23.96 trillion in the same period last year.
The association also recorded a 44 percent decrease in the total number of policyholders to 46.41 million in the first half of this year from 83.46 million in the same period last year, due to a 51.8 percent drop in group policyholders from 72.84 million in the first half of 2013 to 35.11 million in the same period this year.
'The decrease was caused by low demand for short-term protection products, such as travel and personal-accident insurance. This trend began in the first quarter of this year,' AAJI communications head Nini Sumohandoyo said.
He added, however, that the 6.5 percent increase in the number of life insurance policyholders, from 10.61 million holders in January-June last year to 11.30 million in the same period this year, showed that people's awareness of and confidence in insurance was growing.
Nini also said that AAJI would continue to raise the public's awareness about insurance, especially in schools and universities, on Insurance Day, which falls on Oct. 18. (gda)
