Crisis pushes up life insurance demand

JAKARTA (JP): PT Sewu New York Life (SNYL), a life insurance joint venture has reported robust growth in sales in the last two months, reflecting people's increased insecurity about the future.

Company president C. Donald Carden said yesterday the uncertainty resulting from the country's worst-ever economic crisis had significantly pushed up demand for life insurance because people saw it as the best way to invest their money.

He said that the company booked a net profit of Rp 40 billion (US$3 million) in this year's first semester, a 3,900 percent increase compared to a measly Rp 1 billion in the corresponding period last year.

"Regardless of the current unfavorable economic conditions, Sewu New York Life has been able to record monthly sales of between Rp 2.5 billion and Rp 3 billion during the first half of this year. But in June alone we sold more than 2,000 policies worth Rp 4 billion."

The company expects its total premium income to reach Rp 135 billion this year, slightly more than the Rp 130 billion recorded in 1997.

SNYL, established in 1992, is 51 percent owned by New York Life International (NYLI) and 49 percent by PT Gunung Sewu Kencana. The company has 37 branches in 17 cities with over 1,800 agents nationwide.

NYLI's visiting president and chief operating officer, Mike Nocera, said the Indonesian insurance industry needed a much stronger capital base to provide security and long-term guarantees to its policyholders.

"Without sufficient capital back-up, life insurance firms cannot fulfill their obligations to their policyholders which could have a negative impact on the industry," he said.

He stressed his visit to the capital was mainly to reaffirm the company's confidence and long-term commitment to the country, adding that he would also meet key officials from insurance regulators. (gis)