Many insurance clients cut dollar-based contracts<\/p>\n
JAKARTA (JP): Many insurance companies's clients have
\nterminated their U.S. dollar-based insurance contracts to avoid
\nthe high increase in premiums resulting from the rupiah's sharp
\ndepreciation against the dollar.<\/p>\n
Director of Allianz Aken Life Peter Endres said yesterday the
\ndollar-based policyholders could no longer afford to pay their
\npremiums.<\/p>\n
\"They terminate their contracts because they can not pay the
\npremiums which have risen considerably following the rupiah's
\nsharp depreciation against the dollar,\" Endres said.<\/p>\n
The Indonesian rupiah has been hovering between 8,500 and over
\n10,000 against the U.S. dollar for the last several months,
\nrising from about 2,450 in July when the currency crisis first
\nhit the country.<\/p>\n
He said the number of clients who stopped their contracts in
\nthe last two months alone reached 750, equivalent to the contract
\nterminations for 1997.<\/p>\n
Holders of dollar-based policies account for 20 percent of the
\ncompany's 50,000 policyholders.<\/p>\n
Allianz Aken is 80 percent owned by Germany's giant insurance
\ncompany and 20 percent by PT Kresna Karya of the Aken group. The
\ninsurance company, which started operations in 1996, has 36
\nbranches throughout the country catering to middle to upper class
\nindividuals and group customers.<\/p>\n
Andres said in a bid to cope with the surge in contract
\nterminations, Allianz Aken had recently introduced a program to
\nallow its customers to convert their dollar policies into rupiah
\nones as well as to reduce their policy value.<\/p>\n
Customers could take home the surplus from the conversion into
\nrupiah of their dollar policy in dollars or use it to pay
\npremiums, Endres said.<\/p>\n
Allianz Aken used the selling rate at Bank Indonesia as the
\nexchange rate for the conversion, he said.<\/p>\n
\"We are aware of the hardships facing our clients during the
\ncurrent crisis, but we offer solutions so that they can stick to
\ntheir contracts,\" Endres said.<\/p>\n
Endres called on the company's customers not to worry about
\nthe company's liquidity since additional capital would be
\ninjected this year to bring its paid-up capital to Rp 56.25
\nbillion from Rp 9.25 billion.<\/p>\n
Besides, Allianz Aken always adopts a conservative policy in
\ninvesting its clients' money.<\/p>\n
\"We are not speculating for exchange gains by converting into
\ndifferent currencies. When dealing with our policyholders' money,
\nwe always put security first,\" he said.<\/p>\n
The clients' money was mostly deposited with international
\nbanks and state banks, he said.<\/p>\n
Company director Jens Reisch stated that Allianz was committed
\nto a long-term investment in Indonesia.<\/p>\n
\"Allianz never stops operation in any country. Anyway, we are
\nstill confident of Indonesia's prospects,\" he said.<\/p>\n
Reisch said Allianz Aken booked about 900 new policyholders
\nper month over the past two years, but the company projected zero
\ngrowth this year.<\/p>\n
\"Indonesians have not yet become an insurance-minded people.
\nThe crisis will further discourage them from insuring
\nthemselves,\" Reisch said.<\/p>\n
Reisch said the country's insurance market would generally be
\nin a slump this year but he predicted an increase in the demand
\nfor single premium products.<\/p>\n
This product is especially designed for people who can afford
\nto pay all the premiums in advance in the expectation of higher
\nbenefits in the future.<\/p>\n
\"Today, many people here have become poor, but many people
\nbecome rich. We are offering the single premium products to the
\nnewly rich,\" Reisch said. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/many-insurance-clients-cut-dollar-based-contracts-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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