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.