The company, part of financial services firm Capital Financial Indonesia, is confident that expanding the distribution channel will help maximize the potential of its captive market.

About 99 percent of its business came from bancassurance channels, in which it offered unit linked and traditional life insurance products, said Capital Life president director Antony Japari.

“Our main distribution channel is bancassurance, primarily through our collaboration with Bank Capital,” he said at an event in Jakarta recently.

According to the company’s executives, bancassurance is more effective than other distribution channels, such as individual agents. Antony argued that, nowadays, setting up an agency channel from the ground would take a lot of time and money.

In bancassurance, the company started a partnership with publicly listed lender Bank Bukopin this year, while looking for opportunities to collaborate with either state-owned banks or other private lenders to sell its
products.

“We are planning to add at least three bancassurance partners this year. We are targeting banks and multifinance companies,” business director Robin Winata said at the same event.

Moreover, the company is also preparing for the creation of a financial institution pension fund (DPLK) business unit, considering the big market potential that it can grab in the future.

The company is still waiting for the DPLK business permit from the Financial Services Authority (OJK), and is expecting to receive it after the Idul Fitri holiday.

“The market for DPLK in Indonesia is very big since there are many employees who have not been exposed to it,” Antony said.

Besides widening its distribution channel, the company plans to introduce two new products this year. The first product, which was launched recently, is a regular unit-linked product that combines both insurance and investment under a single integrated plan.

Antony said the second product in the pipeline would be a traditional insurance product with return-on-premium, meaning that if investors are still alive at the end of the policy term, they will be able to get their premium back.

“Customers nowadays want certainty, so we want to provide them with products that allow premiums to be returned as a maturity benefit,” he explained, adding that the product was expected to be launched in the fourth quarter of 2018.

With two new products and upcoming additional partners in bancassurance, the company is aiming to book Rp 6.5 trillion (US$461.5 million) in new premium revenue this year, Antony said.

Capital Life booked Rp 3.11 trillion in new premium revenue as of May, an increase of 52 percent year-on-year.

Premium revenue from unit-linked products amounted to Rp 1.7 trillion, while traditional products contributed Rp 1.4 trillion.

Previously, the Indonesian Life Insurance Association (AAJI) forecast that the average premium revenue would rise by 15 percent in 2018 from the previous year.

As Indonesia will start simultaneous regional elections this month, life insurance industry players expect the positive trend to continue in 2018 on the back of more introductions in product innovation.

Ahmad Nasrullah, the OJK’s director of insurance and social security supervision, previously said the financial regulator welcomed insurers’ move to digitize their operations, but stressed the importance of protecting customers.

“Insurance companies are obliged to keep their customers’ data confidential,” Ahmad said, emphasizing that the information should not fall into the hands of a third party, such as a data aggregator.

The OJK is currently formulating regulations on the digital operations of insurance companies that would protect their customers, but not be too rigid as to limit their business, Ahmad said.

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