Political concerns push up demand for life insurance

JAKARTA (JP): The demand for life insurance significantly increased during the last two months as people feel more insecure about their future, an insurer said yesterday.

David W. Cottrell, the president of joint venture life insurance PT Asuransi Jiwa Bumiputera John Hancock said unrest, riots and anti-government demonstrations in the past several months, combined with the country's economic crisis, caused financial and political uncertainty.

Such uncertainties prompted the people to seek financial alternatives to protect their future and life insurance coverage has become one of the best choices, he told journalists at the launching of the company's new life insurance product.

"The people fear that anything bad can happen to them in the current unstable political and social environment. It makes them want to save something for their loved ones as a safeguard if something bad happens to them," he said.

The company's sales and marketing director Robert A. Wannee said the company netted about 200 new policyholders monthly since May when riots, looting and arson hit Jakarta and several other cities.

The massive riots, which led to the resignation of President Soeharto, left hundreds of people dead, mostly trapped in burned shopping centers and malls in Jakarta.

He said before May the number of new policyholders was about 100 per month.

"This month, the premium income is expected to reach US$300 million, compared to merely $130 million in the same month last year," he said.

He added that other life insurance companies were also experiencing the same trend.

Bumiputera John Hancock, established in 1987, is 20 percent owned by PT Asuransi Jiwa Bersama Bumiputera 1912, Indonesia's oldest life insurer and 80 percent by U.S based John Hancock Mutual Life Insurance Company, a giant life insurance company with over $110 billion assets.

The company launched a new product called Garuda (Your Family Guard) which combines investment and insurance with protection from inflation.

Cottrell said the new product is particularly designed for Indonesian families who need a financial plan that addresses the current uncertain economic conditions and prepares them for a financially sound and stable future.

"Garuda policyholders are protected from currency depreciation and inflation. Besides, they do not have to pay regular premiums to be protected; in fact, Garuda can work well with only one initial investment," Cottrell said.

He said that the company targeted sales of 500 policies per month by the end of this year. At least 10 percent of these are expected to be the Garuda product. (gis)