TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Life insurers shift investment to mutual funds as interest rate declines
Change Size
Healthcare card: Health insurance firm PT Askes’ director Sri Endang Tidarwati shows a health insurance card in Jakarta, in this file photo. The BPJS Kesehatan (Healthcare and Social Security Agency) scheme came into effect on Jan. 1, 2014. (JP/-)
I
ndonesian life insurance companies have shifted parts of their investment from bank deposits to mutual funds and other investment options amid the downward trend in interest rates.
According to Indonesian Life Insurance Association (AAJI) data, the investment of the association’s members in the bank deposits dropped by 9.43 percent to Rp 51.2 trillion year-on-year in the first half of this year.
The proportion of their investment in bank deposits dropped to 14.11 percent as of July from 17.64 percent in the same period in 2015. From all investment instruments chosen by the life insurance industry, only those placed in bank deposits suffered a decline as all other investment options went up.
Investment in mutual funds rose 21.83 percent to Rp 121.2 trillion, accounting for 33.4 percent of total investment, which reached Rp 362.91 trillion.
"As the financial market gets back in shape since the beginning of 2016, mutual funds' net assets value (NAV) is also growing, making it an attractive instrument to get away from bank deposits," AAJI Chairman Hendrisman Rahim said in a press conference concerning performance of the life insurance industry in Jakarta on Monday.
Bank Indonesia has cut its reference rate by 125 basis points (bps) to 5 percent since January. Commercial banks have also reduced their deposit rates to between 5 and 7 percent during the same period. (dan)
