Insurance to grow by double digits
The Jakarta Post, Jakarta
The domestic insurance industry is expected to grow by double digits again this year due to a combination of the public's increased familiarity with its products and higher purchasing power, according to two industry observers.
The head of research at InfoBank, a magazine specializing in the financial industry, Eko Supriyanto, said that based on his projection, life insurance premiums should grow by about 30 percent this year while general insurance premiums should grow by 15 percent.
"This year's growth should be as high as last year's remarkable growth," said Supriyanto, whose magazine announced its ratings of 134 insurance companies on Monday.
According to data from the Indonesian Insurance Council (DAI), life insurance premiums grew by 37 percent from Rp 13.37 trillion (US$1.4 billion) in 2003 to Rp 18.35 trillion in 2004, while premiums for general insurance grew by 9.7 percent from Rp 13.1 trillion to Rp 14.65 trillion.
DAI chairman Hotbonar Sinaga concurred, saying that based on the council's data, premiums for life insurance should grow by at least 30 percent, while premiums for general insurance should grow by between 10 percent and 15 percent.
"The public's knowledge of insurance products is increasing, leading to the high growth in the life insurance segment," he said.
He added that the insurance industry had a lot of room for growth as life insurance has penetrated only about 15 percent of the population, while less than 1 percent of the annual GDP in products is covered by insurance.
He said that insurers marketing their products through banks, a practice commonly referred to as bancassurance, and those offering unit-linked products would experience a growth of as much as 50 percent.
In contrast to traditional insurance offerings, unit-linked insurance policies, do not guarantee a specific rate of return, However, returns on unit-linked policies are often higher because they invested in products such as mutual funds, he said.
"The growth in life insurance has been spurred by people shifting their money from bank deposits to unit-linked products," said Hotbonar.
Supriyanto estimated that between Rp 2 trillion and Rp 3 trillion in bank deposits had shifted to unit-linked products in the first quarter of this year.
"People were simply seeking higher returns than that provided by bank deposits," he explained. (002)
Best insurers
Five best life insurance companies (in order)
1. Asuransi Cigna
2. Asuransi Jiwa Central Asia Raya
3. Credit Suisse Life & Pensions Indonesia
4. Prudential Life Insurance
5. Asuransi Jiwa Askrida
Five best general insurance companies (in order)
1. Asuransi Mitsui Sumitomo Indonesia
2. Asuransi Parolamas
3. Asuransi Tokio Marine Indonesia
4. Asuransi Astra Buana
5. Asuransi Kredit Indonesia
Source: InfoBank