The number of individuals and groups holding life insurance policies dropped 11 percent last year as people opted instead to pursue short-term profits and gain easier access to cash, an association said Wednesday.
According to the Indonesian Life Insurance Association (AAJI), the number of policy holders declined to 28.38 million as of last December from 31.93 million in the same month in 2006.
"People preferred to invest their money in time deposits and other short-term instruments rather than long-term insurance premiums," AAJI chairwoman Evelina Pietruschka told reporters.
She said to halt the number from declining further, life insurance firms should combine or link their products with time-deposit instruments.
"People now tend to choose insurances that give them additional benefits," she said.
Despite the decline, total premium revenues of 40 insurance firms reporting to the association last year jumped 67 percent to Rp 44.4 trillion (US$4.83 billion) from Rp 26.5 trillion in 2006, according to AAJI.
The reporting companies included a state-owned firm, 24 domestic firms and 15 joint ventures.
Around Rp 30.6 trillion of the revenues were derived from new businesses or clients, up by 94 percent from Rp 15.8 trillion in 2006.
"The significant growth of revenues from new businesses was down to the country's improving economic situation," Evelina said, adding the growth was also partly owing to some innovation in insurance products and expansion of distribution networks.
"The industry (premium revenues) will grow at least at the same pace as in 2007 because of numerous new businesses being started in the country," she said.
With investible funds worth Rp 90.9 trillion last year, up by 50 percent from Rp 60.7 trillion in 2006, the industry recorded a 76 percent jump in investment proceeds to Rp 10.4 trillion.
Evelina said the companies' total assets were worth Rp 101.2 trillion as of 2007, a 52 percent increase from the previous year. (rff)