JAKARTA POST, The life insurance industry showed significant growth in the first quarter of the year; with total premium revenue increasing by 62 percent to Rp 8.365 trillion (approximately US$ 959 million) from Rp 5.35 trillion in the same period last year.
The executive director of the Indonesia Life Insurance Association (AAJI), Eddy KA Berutu, said last Friday the increase was due mainly to 97 percent growth in premium revenue from new customers to Rp 5.56 trillion from Rp 2.83 trillion in the first quarter pf last year.
“People’s awareness about the importance of insurance is increasing and the country’s economic situation is improving. Therefore, people can now set aside more of their money to pay for insurance premiums,” he said.
Of the total payments made on policy premiums, individual policyholders contributed 83 percent, or Rp 7.17 trillion, while collective policy holders contributed the remaining 17 percent, or Rp .49 trillion.
With its good first quarter start, the life insurance industry is expected to experience more growth in 2007, Eddy said.
He estimates the number of policy holders will increase by 25 percent to 30 percent this year.
During the first quarter of this year alone, the number of policy holders increased by 8 percent to 34.54 million from 31.93 million at the end of 2006.
Forty life insurance companies in the AAJI reported to have 6.65 million individual and 27.89 million collective policy holders as of the end of March, meaning that only approximately 14 percent of Indonesia’s 240 million people are insured.
To increase this “still low penetration rate”, AAJI announced that by the end of June, the association will start a five-year “life insurance awareness movement”, which will be supported by its members along with Insurance Bureau of the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK).
As part of the program AAJI will run public advertisements and hold talk show in various cities, including Jakarta and Bandung this year.
“We hope the number of policyholders will dramatically increase with this program,” Eddy said.
During the press conference held by the association, Eddy said that un the first quarter of this year , the life insurance industry also experienced growth in investment revenue.
In line with a 41 percent increase of its total investment to Rp 66.48 trillion from Rp 47.05 trillion in the first quarter of 2006, the industry booked Rp 1.39 trillion in revenue from the investment.
The total revenue of the life insurance industry rose by 57 percent from Rp 6.5 trillion in the first quarter of 2006 to Rp 10.2 trillion in the first quarter of 2007, increasing the industry’s total revenue to Rp 66.39 trillion.
The total amount paid out in insurance claims, Eddy said, rose by 40 percent to Rp 3.6 trillion.
He said that to run its business, the life insurance industry relies on approximately 135,000 agents.
Marketing insurance products to bank customers (bancassurance), although showing an increase, still only contributed to approximately 25 percent to the industry’s marketing.