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Unit-linked products drag down life insurance premiums in Q1
The Indonesian Life Insurance Association (AAJI) is optimistic that premium income will improve as insurance companies make adjustments to their unit-linked offerings.
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The office of the Indonesian Life Insurance Association (AAJI) in Jakarta is shown in this undated photo. (Courtesy of AAJI)
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ndonesian life insurers have reported a drop in premium revenue that they attribute chiefly to lower income from unit-linked products.
The Indonesian Life Insurance Association (AAJI) stated that premium income of life insurance companies dropped to Rp 45.6 trillion in the first quarter (Q1) of this year, which is down 6.9 percent from Rp 49 trillion in 2022.
According to Budi Tampubolon, chairman of the AAJI’s management board, the dip was caused especially by a decline in revenue through bancassurance channels.
Unit-linked insurance plans combine insurance with an investment portfolio. News reports from recent years show that many customers in Indonesia have raised complaints over such products, often because they were not given enough understanding about the risk of market fluctuations at the time of signing up.
At Rp 23 trillion in the first three months of 2023, premium income from unit-linked products was down 20.9 percent year-on-year (yoy).
Budi said the drop was not caused by a worsening performance of life insurance companies, but rather by an instruction from the supervisory authority.
He referred to Financial Services Authority (OJK) Circular No. 5/2022 on marketing, asset management, transparency and minimum capital requirements for selling unit-linked insurance, which took effect at the beginning of this year.
