Life insurance business expected to forge ahead<\/p>\n
JAKARTA (JP): The Indonesian Insurance Council (DAI) predicts
\nthat this year's life insurance industry will far exceed 1998's
\ngrowth, after their survey shows a better than expected growth
\nlevel during the first half of 1999.<\/p>\n
The council's survey on performances of 36 local and joint-
\nventure insurance companies revealed that a sharp rise in new
\npremiums' income and policyholders has contributed to the
\nsignificant growth in the first half of 1999.<\/p>\n
One of the council's executives, Angger P. Yuwono, told a
\nmedia briefing on Friday "And considering that new business
\nalways starts growing during the second semester of a year, we're
\nconfident that 1999's premium income would exceed last year's by
\n50 percent."<\/p>\n
Based on the survey, total premium income for the first half
\nof 1999 reached 60 percent of the entire premium income for last
\nyear.<\/p>\n
"We made, in total, Rp 1.89 trillion (US$ 236 million) in the
\nfirst half of 1999. Compared with last year's Rp 3.13 trillion
\ntotal premium income," Anggar said.<\/p>\n
The survey disclosed new premium income (premiums of new
\npolicyholders) to have reached Rp 1.163 trillion, comprising Rp
\n1.05 trillion from individual insurances and Rp 113 billion from
\ngroup insurances.<\/p>\n
"What strikes us as surprising, is the fact that from the Rp
\n1.05 trillion of individual insurances, Rp 776 billion worth of
\npremiums have been paid in full, in advance instead on an
\ninstallment basis," Angger said, adding that this shows people
\nhad large amounts of money available for investment.<\/p>\n
However, while new premium growth was impressive in the first
\nhalf of 1999, income from continued premiums (premiums of old
\npolicyholders) during the same period, only constituted 43
\npercent of total continued premium income in 1998.<\/p>\n
Nevertheless, as the second half of the year constitutes a
\nsignificant growth period in the insurance industry, DAI expected
\nthe total income of continued premiums to reach the same amount
\nas in 1998.<\/p>\n
DAI also surveyed the growth of new policyholders and
\nregistered over 233,000 new participants during the first half of
\n1999, which now totals 9,242,908 participants.<\/p>\n
Meanwhile, claims made during the first half of 1999 dropped
\nfrom Rp 5.20 trillion to only Rp 1.30 trillion, exceeding the
\namount of total premium income of only Rp 1.16 trillion during
\nthat period.<\/p>\n
"What is interesting here is that the amount of claims for
\ncash value dropped from Rp 2.83 trillion last year to only Rp 338
\nbillion," said Angger, who is also vice president of PT Asuransi
\nAIA Indonesia.<\/p>\n
Furthermore, investment of life insurance companies during the
\nfirst half of 1999 also plunged, with only Rp 305 billion
\ncompared to Rp 3.11 trillion during 1998.<\/p>\n
DAI estimates this drop to have been caused by the decline in
\ninvestments in U.S. dollar-based assets.<\/p>\n
In addition, the decline in time deposit rates and promissory
\nnotes made investment in the money market also less attractive
\nthan last year, DAI reported.<\/p>\n
"We cannot compare this year's investment climate to last
\nyear's, when interest rates skyrocketed," Angger said, explaining
\nthat Rp 305 billion still constitutes a decent amount of
\ninvestment.<\/p>\n
Angger said that in the future an investment information
\ncenter should be established to allow insurance companies to
\nboost their investment performance.<\/p>\n
He added that policy products could be designed in such way
\nthat investment risks could be reduced by having policyholders
\nshare the risk through a participating investment policy product.<\/p>\n
"Tying interest rates for policyholders to the investment
\nrates earned by insurance companies would reduce the risk of
\nlost," Angger explained. (03)<\/p>",
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