Insurance companies are looking to their agents to sell more policies to Indonesians.

“Insurance agents still make a huge contribution to insurance companies’ premium income,” Indonesian Life Insurance Association (AAJI) executive director Togar Pasaribu said.

According to the AAJI’s unaudited data, insurance agents contributed 39.5 percent to total premium income last year, a 0.9 percent year-on-year (yoy) increase from the previous year.

“We expect to see 1 million insurance agents in Indonesia in the long run,” Togar said.

At present, there were over 585,000 insurance agents in Indonesia, according to the AAJI. The figure is inadequate because Indonesia has a population of around 265 million people.

Private life insurance firm AIA Financial (AIA) agency director Ang Tiam Kit said the low number of agents was one of the main reasons for Indonesia’s low insurance penetration.

The Indonesian Insurance Council previously said only 1.7 percent of Indonesians have some form of insurance.

“Clients [in Indonesia] deserve the best advisers, which is why the AIA has been implementing the premium agency strategy in the country,” Ang said.

Through this strategy, the AIA was providing training programs to its fulltime agents, which had reached around 4,000 as of 2018, the AIA’s president director, Ben Ng, said.

The company also launched a co-working space, AIA Big Bang, at its headquarter in Jakarta as part of its efforts to provide a platform for its agents to hone their skills.

Ben said the company was targeting to develop more agents so they could qualify as members of the United States-based Million Dollar Round Table (MDRT) financial professionals association.

The MDRT requires potential members to reach an annual premium income target in their own countries, which comes to around Rp 580 million (US$40,764) in Indonesia.

Ben said around 400 AIA agents are MDRT members, almost four times the number of 2014. There are currently 2,048 members in Indonesia.

“The result is good [so far]. Our agency channel has been the fastest growing one in AIA Indonesia. The opportunity is big,” he added, saying the company had recorded 1.2 million policy holders so far.

However, he admitted that bancassurance still contributed more than 50 percent to the company’s premium income. He expected all of its channels to grow this year.

Despite many companies resorting to online platforms to reach new policy holders, Ben said such measures would not be the company’s main focus for now. He added that contributions from its online sales were very small and would remain so in years to come.

“We believe that people waking up in the morning and wanting to buy insurance is not happening in Indonesia yet. It’s going to take a while before that happens,” Ben said.

“The job of agents is not to just tell you [that] you need insurance. Their job is to also tell you how much you need and what exactly you need, and that’s the part that digital can’t replace.”

MDRT Indonesia chairman Glen Alexander Winata shared this sentiment.

He said because Indonesians’ awareness about the importance of insurance was low, companies still needed agents to inform potential policy holders.

“We have to emotionally influence [potential policy holders]. We need to inform them of the impact of the product, and not the product itself.

“When it comes to products, surely people can find out for themselves [online]. However, that’s not what moves the potential policy holders to buy the products.”

As insurance agents saw growth in their contribution to total premium incomes, the AAJI recorded that bancassurance saw an 11.2 percent decrease in its contribution, which stood at 42.9 percent last year.

The remaining 17.6 percent came from alternative sources, which according to Togar included online and telemarketing channels, among others. The figure, though, also saw a 1.4 percent decline from its contribution in 2017.

The declines in the two channels are in line with a 5 percent yoy decrease in last year’s total premium incomes to Rp 185.88 trillion. (ars)

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