Despite some improvements needed, life insurance industry in Indonesia has developed into an engine of opportunities in emerging markets.
“The figure includes those who are covered under policies of Group Life Insurance or Employee Benefit Insurance. It means that there is still a lot of room for improvement and opportunities for the insurance companies to provide insurance protection for the Indonesian communities,” explains Nelly Husnayati, vice president director & head of Employee Benefit and Sharia Business of PT AJ. Manulife Indonesia.
The Indonesian insurance industry is growing. In fact, it has grown the fastest among ASEAN countries. The growth, as she continues, is due to the increasing demand and sales of insurance, mainly in big cities in the archipelago.
Nelly adds that the industry’s auspicious prospect has not only attracted a number of new insurance companies to enter the market, but also the existing companies to customize their insurance products and services as well as maximizing their distribution channels.
“Correspondingly, we offer a wide range of insurance products to meet each customer’s specific needs. We provide these products through our multi channel distributions, which are agency and Bancassurance,” she says referring to Manulife Indonesia’s products and services, which also include the provision of Employee Benefit Consultant, Broker and Direct Marketing & Tele Marketing.
With reference to the role of insurance industry in the world’s emerging economies, Nelly expresses her view, “While life insurance industries in countries with advanced economies have reached their maturity, countries with emerging economies are usually attributed with vast population and rising household wealth. So, many of the emerging countries, like Indonesia, take this opportunity to attract investors to support their economic growth. Likewise, investors also start to look for opportunities to invest, especially in the insurance industries.”
Hendrisman Rahim, the chairman of the Indonesia Life Insurance Association (AAJI), says the association is forecasting that life insurance companies’ premium income will grow between 25 percent and 30 percent in 2012. “ And by the end of the year, new premiums in the country’s life insurance industry will reach IDR 65.75 trillion or around US$ 7.18 billion, while the renewal of existing premiums will reach Rp 27.03 trillion or around US$ 2.95 billion.”
He further says that Indonesia’s growing middle class has pushed the insurance industry to enter the untapped market. However, improvements are necessary in order to boost the industry at most favorable circumstance.
“Some insurance companies have developed a variety of micro insurance products to expand the market. We hope that more companies will do the same, as the market potential for lower-middle income thresholds is very huge,” he asserts.
Regardless of the industry’s bright outlook, there is still the need of improving public education about the benefits of having a life insurance policy. Both Nelly and Hendrisman share the same view that providing better insurance education to the market has the potential to increase not only the insurance awareness, but also the insurance penetration rate.
By Aulia R. Sungkar. Published in HighEnd Magazine, March 2012