Life insurer Commonwealth Life, part of the Commonwealth Bank of Australia (CBA) Group, will venture into the pension fund management business next year as it sees immense potential in this line of business.

The plan to go into pension fund management is likely to go on stream next year, Commonwealth Life president director Simon Bennett said on Monday.

To qualify as a pension fund manager, Commonwealth Life must secure a permit from the Financial Services Authority (OJK). Within six to 12 months, the company will focus on setting up the infrastructure and system for this new line of business.

“Things are going to change in 15 to 20 years, people will start thinking about long term savings and pension plans,” Bennett said in an interview with The Jakarta Post.

Currently, Commonwealth Life, which is among the largest life insurers operating in Indonesia, does not offer pension fund-specific products, but it has Investra Platinum for long-term investments and Commpact for accident risk.

“We want the general public to be aware that planning for personal financial future rests with individuals and the companies they work for,” Commonwealth Life’s agency sales director David Ng said.

The firm at present focuses on individual customers instead of on corporate clients. With the new plan to manage pension funds, it expects to target more corporate customers.

“We will have to change our distribution channel for that segment because we are very much individual-focused now,” Bennett said.

At present, Commonwealth Life has two main categories of policy, namely 70 percent regular premium contracts and 30 percent single premium contracts. The regular premium contracts have a wide product mix, mostly unit links, and the remaining elements include mortgage telemarketing and others, Bennett said.

The proportion of the company’s premium income changes from year to year. Last year, when the market for stocks was not favorable, people became more cautious in investing in the stock market. Thus, the company booked a greater proportion in regular premium contracts, he explained.

As part of the company’s strategy to increase Indonesia’s stubbornly low insurance penetration, Commonwealth Life launched a financial calculator mobile phone app in 2015. This app enables people to plan their finances through three choices: education, retirement and future planning, Denny Sorimulia Karim, associate director of operations at Commonwealth Life said.

“Not only the OJK, but everyone in the industry should work together to improve the nation’s financial literacy,” he added.

Commonwealth Life’s products are distributed through its 28 offices around the country as well through partnerships with 20 institutions. Among these institutions, 16 are banks and four are multifinance companies.

This year, the company has secured three new partnerships with PT Telekomunikasi Seluler (Telkomsel) in the form of marketing cooperation, Qatari National Bank (QNB) in bancassurances and Adira Finance in the form of credit life insurance.

This year, Commonwealth Life expects to net Rp 2 trillion (US$150 million) in premium income, driven by unit link purchases, Pieter Wattimena, Commonwealth Life’s director of alternative distribution channels, said. Last year, the company recorded Rp 1.84 trillion in premium income.

The firm also plans to add 500 agents to its existing 5,000 agents in a bid to sell more of its insurance products this year. (win)

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