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Jakarta Post

Life insurance firms still rely on agents to win customers

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Sat, August 15, 2015   /  04:13 pm
Life insurance firms still rely on agents to win customers Promising business: Indonesian Life Insurance Association’s (AAJI) chairman Hendrisman Rahim (center), Indonesia Million Dollar Round Table’s (MDRT) country chair Lucy Dewani (left) and MDRT Day 2015’s committee chair Siwan (right) brief the media about plans for the MDRT Day 2015 event at the AAJI office in Jakarta on Friday. The association expects the MDRT Day 2015 to improve insurance companies’ professionalism. (JP/ Jerry Adiguna) (AAJI) chairman Hendrisman Rahim (center), Indonesia Million Dollar Round Table’s (MDRT) country chair Lucy Dewani (left) and MDRT Day 2015’s committee chair Siwan (right) brief the media about plans for the MDRT Day 2015 event at the AAJI office in Jakarta on Friday. The association expects the MDRT Day 2015 to improve insurance companies’ professionalism. (JP/ Jerry Adiguna)

Promising business: Indonesian Life Insurance Association'€™s (AAJI) chairman Hendrisman Rahim (center), Indonesia Million Dollar Round Table'€™s (MDRT) country chair Lucy Dewani (left) and MDRT Day 2015'€™s committee chair Siwan (right) brief the media about plans for the MDRT Day 2015 event at the AAJI office in Jakarta on Friday. The association expects the MDRT Day 2015 to improve insurance companies'€™ professionalism. (JP/ Jerry Adiguna)

Insurance agents still contribute the greater part of the premium incomes of local insurance companies despite the increase in the use of banking channels, or bancassurance, to net new policyholders, according to the Indonesian Life Insurance Association (AAJI)

AAJI chairman Hendrisman Rahim said agents played the largest role in winning customers, followed by bancassurance and various channels such as telemarketing.

'€œOur data shows that the agents contributed almost 50 percent of last year'€™s Rp 121 trillion [US$8.85 billion] of life insurance premiums,'€ he said, adding that his body aimed to have 500,000 agents by this year-end and 1 million agents by 2020.

As many as 454,706 licensed life insurance agents were recorded as of June, a 27.46 percent increase from the 356,731 agents recorded in 2013. The annual average growth since 2013 reached 17 percent, according to the association'€™s data.

AAJI acting executive director Togar Pasaribu revealed that the contribution by agents was closely followed by bancassurance at around 48 percent while the remainder came from other sources, including telemarketing.

'€œHowever, I doubt that online marketing will work for Indonesian customers any time soon because currently they prefer to have face-to-face briefings prior to deciding to buy an insurance product,'€ he said.

Togar went on to say that online marketing would work only if Indonesian customers were fully literate in insurance terms.

The growing number of life insurance agents has also led to a rise in the membership of the Million Dollar Round Table (MDRT).

The MDRT '€” also known as the Premiere Association of Financial Professionals '€” is an association of professional insurance agents from around the globe.

Having been established in 1927, the association now has more than 38,000 financial and life insurance professionals from around 450 companies in 74 countries as its members.

To become a member, an agent has to book premiums amounting Rp 543.48 million per annum and a further Rp 1.63 billion and Rp 3.26 billion to qualify as a member of the Court of the Table (COT) and the Top of the Table (TOT), respectively.

According to data of the Financial Services Authority (OJK), life insurance net premium income as of June amounted to Rp 49.32 trillion, jumping more than 130 percent from the Rp 20.75 trillion recorded in March.

Country chairman of Indonesia MDRT, Lucy Dewani, said that her association aimed at educating life insurance agents to be professional and successful agents.

'€œWe are ready to give training and disseminate information on the benefits of becoming a member to agents of various local insurance companies,'€ she said, adding that usually foreign joint-venture insurance companies, such as Prudential, Allianz and AIA, were already aware of her association.

Over 860 Indonesian agents are MDRT members. Although this represents only 0.19 percent of the total number of agents in the country, it stands as the second highest in the Asia Pacific region.

The Philippines tops the ranking with 1,240 MDRT members, Thailand comes third with 854 members, Singapore and Malaysia with 845 and 672, respectively. (prm)

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