Life insurance industry books 28% premium growth
Life insurance industry books 28% premium growth
Anissa S. Febrina, The Jakarta Post, Jakarta
With the robust growth of unit-linked products as its key driver,
the life insurance industry reported on Monday a 28.4-percent
growth in total premiums during the year's first semester.
Nineteen insurance companies grouped in the Indonesia Life
Insurance Association reported that their unaudited total
premiums grew from a total of Rp 8.5 trillion (US$844.51 million)
in the first semester last year, to Rp 10.9 trillion for the same
period this year.
"People are eying unit-linked products, which give us a
flexibility in protection as well as in investment," association
executive director Eddy Berutu said.
Unit-linked products -- first introduced to Indonesian
insurance consumers in 1993 -- offer customers the freedom to
choose from a range of investment options and provide regular
details on the their investment yields. The products are popular
with middle-income consumers.
"The product portfolio has grown by 120 percent in this year's
second quarter as compared to the same period last year," Eddy
said.
The association also reported that there were Rp 6.7 trillion
of new premiums in the second quarter of 2005 alone. The number
grew by 45.6 percent compared to the same period last year.
Aside from growing unit-linked products, bancassurance
products have also seen significant growth, which contributed
around 10 percent to the total new premium.
There has also been a 5 percent growth in the number of
customers, from 29.4 million by the end of 2004, to the current
30.9 million.
With a ratio of 1:7, Indonesia -- along with India and China
-- is among highly populated countries with low ratio of insured
people to uninsured people.
As a comparison, neighboring country Malaysia reported 50
percent of its population insured, while 78 percent of
Singaporeans hold some form of life insurance.
With its current coverage, the insurance industry here could
be one valuable source of finance for development projects, Eddy
said.
"Unlike other industries, the insurance industry is not
affected by uncertainties surrounding such things as fuel price
hikes and the recent Bali bombing."
The government raised fuel prices by an average of 126.6
percent on Oct. 1, the same day that three bombs exploded in
Jimbaran and Kuta in Bali, killing 23 people.
From the industry's total assets of Rp 50.6 trillion as of
June 2005, 57.3 percent (Rp 23.5 trillion) was channeled through
stocks and securities, 16.2 percent (Rp 6.7 trillion) through
deposits and 13.4 percent (Rp 5.5 trillion) through mutual funds.