Life insurance companies book solid growth

JAKARTA (JP): Most local insurance companies reported a solid growth in premium incomes in the last two years due to a significant growth in the number of new policyholders.

Angger P. Yuwono, the vice president of Asuransi AIA Indonesia, said the demand for life insurance continued to grow despite a drastic drop in early 1998 during which many policyholders discontinued their contracts.

He said he was quite sure the bullish demand would continue to expand in coming years with an improvement in people's awareness about the importance of life insurance in their lives.

About Rp 2.83 billion worth of policies of 36 major life insurance companies were surrendered in 1998 as policyholders, due to the crisis, could no longer afford to pay insurance premiums, according to data provided by the Association of Indonesian Insurance Companies.

Angger said policy surrenders, which mostly took place in early 1998, declined sharply this year.

He said in the first half of this year alone, the new premium income (premium from new policyholders) of the 36 insurance companies reached a total of Rp 1.16 billion, almost equivalent to the Rp 1.55 billion recorded in the whole of 1998.

"The total of new premium income this year is expected to increase by 50 percent from the 1998 level," he said.

There are about 60 life insurance companies, half of which are multinational and joint venture firms, and some 110 general insurance companies operating in Indonesia.

Hans Martin Graf, president of Zurich Insurance Indonesia, said the life insurance demand, which was interuppted by the sharp increase in policy surrenders in early 1998, continued to show a healthy performance.

The economic crisis, which began to hit the country from late 1997, was followed by a series of violent incidents and this told people how important life insurance packages are for protecting lives, he said.

Laurence Warburton, the president of Asuransi Allianz Life Indonesia, said many people also switched to insurance for investment.

"They don't have the same confidence in banks as they used to. So a lot of people are now looking for other possibilities, in particular, they are looking at life insurance," he said.

He said Allianz saw dynamic growth over the years.

The company secured about Rp 7.02 billion in new premium incomes in 1996, Rp 9.66 billion in 1997 and Rp 19.34 billion in 1998. Allianz had booked Rp 19.16 billion in new business as of August.

C. Donald Carden, the president of Asuransi Jiwa Sewu New York Life, said the company had booked a triple-digit growth during the first four years of operation.

He said Indonesia was a very lucrative market and was not optimally tapped.

"The penetration here is so low. This is a very easy market to sell, much easier than the U.S. because the demand here is stronger. In the U.S., everybody already has something, but here many just have no policy at all," he added.

Zurich's Graf said many people still needed a better insurance product and they should be careful to choose the best insurance package and insurance company.

"As a consumer, you should have the feeling that someone is listening and you are being understood ... So if a person pushes you by saying this is what I have to give you, then he does not understand you at all." (cst)