Life insurance books 31.8% growth

Life insurance books 31.8% growth

Anissa S. Febrina, The Jakarta Post/Jakarta

Boosted predominantly still by unit-linked products, the life
insurance industry reported that it booked a 31.8 percent growth
in premium during the first nine months of 2005.

The Indonesian Life Insurance Association (AAJI) reported on
Thursday that unaudited total premium as of September 2005 grew
to Rp 15.3 trillion (US$1.56 billion) from Rp 12.8 trillion
during the same period last year.

"The recent massive redemption in the mutual fund industry did
not affect the performance of our unit-linked products," AAJI
executive director Eddy Berutu said on Friday. "Our customers are
consistent in maintaining their mid-term investments."

Unit-linked products, first introduced to Indonesian insurance
customers in 1993, offer transparency as customers are given
freedom in their investment options as well as details on the
investment yields from their fund.

The product found its market in the middle-upper segment with
a portfolio that grew by 72 percent this year.

Under the association, the 22 insurance companies offering
unit-linked products booked total new premium of Rp 3.9 trillion
as of September 2005.

The association also reported that to assure the safety of
customers' investments, it had issued a certification for
authorized agents.

"Customers have to make sure that they deal with certified
agents and that their life insurance requests are signed by the
same agents," Eddy explained.

The certification process which started mid last year has
already granted licenses to more than 100,000 insurance agents.

In line with the growth in the industry, the number of agents
grew by 20 percent to 102,584 as of September this year from
75,678 recorded in the same period last year.

With its current coverage, the insurance industry could be one
of the potential channels to absorb public funds to finance
development projects.

Indonesia, along with India and China, is among the highly
populated countries with a low ratio in insurance.

As a comparison, neighboring country Malaysia reported 50
percent of its potential population already insured, while 78
percent of Singaporeans have life insurance.

From total assets of Rp 53.1 trillion as of September 2005, 56
percent (Rp 24.2 trillion) was channeled through stocks and
securities, 19.3 percent (Rp 8.3 trillion) through deposits and
10.3 percent (Rp 4.4 trillion) through mutual funds.

Investments through deposits grew by 19.3 percent as compared
to last year, but mutual funds investments dropped by 20 percent.
The shift in investment strategy was prompted by increasing
interest rates.