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.