I

ndonesia will remain one of the biggest growth drivers for London-based life insurance firm Prudential plc in years to come as many business opportunities have yet to be explored, a senior executive
has said.

Prudential group chief executive Tidjane Thiam said on Monday that the company considered Indonesia as having great business potential, citing the current low insurance penetration.

'€œInsurance penetration is still low because not many Indonesians currently have access to insurance. Prudential itself has around 2.3 million customers in Indonesia, accounting for less than 1 percent of the total population,'€ Thiam said in a media briefing.

'€œWe'€™d like to see the number grow over time, reaching 10 percent of the population. That'€™s the ambition,'€ he added.

Data from Prudential shows that Indonesia is listed as one of the '€œsweet spot countries'€ in Asia, among Malaysia, the Philippines, Singapore, Thailand and Vietnam. Hong Kong is included in the list as well.

Last year, Indonesia and Singapore contributed more than £200 million (US$326.61 million) in operating profits from the life business on an International Financial Reporting Standards (IFRS) basis, making the two countries the largest contributors among the '€œsweet spot countries'€.

The result was a huge contrast to 2007, when the contribution from Indonesia '€” along with several other Asian countries '€” only amounted to less than £50 million.

Thiam said that the business potential was also reflected by protection-gap statistics, which were issued by the World Health Organization in 2011.

'€œOn average, Indonesians must still pay for 50 percent of their medical expenses because the lack of insurance protection,'€ he said.

The gap percentage was high in neighboring countries as well during the same period, at 56 percent in the Philippines and Vietnam, 59 percent in India and 60 percent in Singapore.

In Malaysia and China, the gaps were recorded at 42 percent and 35 percent, respectively.

Prudential would continue to rely on its agents to spur growth in Indonesia, Thiam said.

'€œWe have been investing a lot to grow the number of agents because we think that distribution is very important,'€ he added.

Prudential Indonesia now employs around 220,000 agents.

With such a figure, the company is now the life insurer with the most agents in the country as the total number of agents stood at only 375,253 as of June, as revealed by data from the Indonesian Life Insurance Association (AAJI).

Meanwhile, Prudential Indonesia'€™s own data shows that the income generated from new premiums dropped 14.7 percent year-on-year to Rp 5 trillion ($417.64 million) during the first six months of 2014.

However, when combined with existing premiums, its total premium income rose 6.4 percent to Rp 12.6 trillion from the year before.

Thiam said that Prudential would also continue to channel funds for long-term investments through the capital market.

The life insurer has so far invested Rp 40 trillion in the market, including in infrastructure-related projects.

'€œNaturally, insurance firms are good investors in infrastructure projects because we have long-term liabilities and the projects generate long-term cash flow,'€ he said, adding that dam, power plant and toll-road construction were among the projects in which it was keen to invest.

'€” JP/Tassia Sipahutar