Life insurance in for mixed bag this year
Life insurance in for mixed bag this year
JAKARTA (JP): An upsurge in holders cashing in their life
insurance policies this year will be offset by a surge in
incoming policy holders, a major industry player said yesterday.
The head of the Indonesian Insurance Council's life division,
Sujono Soepeno, predicted life insurers would pay a cash
surrender value of Rp 1.07 trillion (US$82.3 million) this year,
double the Rp 535.08 billion paid out in 1997.
Cash surrender value is the amount of funds paid by insurers
to policy holders who discontinue their policies prior to the
maturity contract date.
Despite the blow, the country's life insurance industry is
projected to record an increase of premium income by 10 percent
this year, mainly from new policy holders, he said.
"Though there are some withdrawals, new policy holders are
expected to come on stream."
Sujono, also president of PT Tugu Mandiri, said the country's
life insurance firms would still face a gloomy outlook for the
rest of this year and 1999 due to the severe economic downturn.
"Life insurance is facing a bleak outlook this year as some
policy holders tend to sell their assets for cash to survive the
crisis."
The total amount of cash surrender value paid by life insurers
in the first semester of this year alone soared compared to the
same period last year, he said, without disclosing the figure.
"And the amount of this cash surrender value payment is
expected to increase by 100 percent this year."
According to the insurance council, the country's life
insurers paid Rp 1.91 trillion in claims last year, a 81.26
percent increase over the previous year.
Of the total claims paid last year, Rp 917.28 billion were for
contracts reaching their maturity date, Rp 535.08 billion for
cash surrender value payment, Rp 234.09 for death claims and Rp
227.60 billion for other claims.
Sujono said some policy holders, badly hit by country's
monetary crisis, were no longer able to continue their premium
payment since early this year and were forced to surrender their
policies to survive the crisis.
Nevertheless, some segments of society who still prosper in
the current situation buy new life policies.
The country's 53 life insurance firms recorded an 27.26
percent increase in total premium income to Rp 3.68 trillion last
year, from Rp 2.85 trillion the previous year.
Combined assets managed by all life insurance companies were
Rp 10.25 trillion as of the end of last year compared to Rp 5.16
trillion the previous year.
Their combined invested funds reached Rp 9.73 trillion as of
last year.
Of the invested funds, 46 percent were placed in bank time
deposits, 19.4 percent in direct participation in businesses,
11.3 percent in equity, 8.38 percent in policy loans, 5.38
percent in real estates, 2.77 percent in mortgage loans, 2.83
percent in promissory notes, 1.52 percent in mutual funds, 0.92
percent in commercial papers and 0.44 percent in other
instruments. (aly)