Until the second quarter of 2014 the life insurance industry recorded a positive return on investment. This is shown by a growth of 75.8%, from IDR 11.82 trillion in the first quarter of 2013 to IDR 20.78 trillion. Chairman of the Indonesian Life Insurance Association (AAJI), Hendrisman Rahim, said that the significant increase was due to the recovery of the Indonesian capital markets after experiencing sharp volatility last year.
Investment in life insurance industry increased by 12.7% from IDR 235.18 trillion in the first quarter of 2013 to IDR 245.97 trillion in the same period this year. “Investment portfolio over the previous year was not much different. Allocation to mutual funds is still the largest, which is up to 30%, followed by shares 29%, bonds 23.8%, and deposits 14.7%,” said Hendrisman in Jakarta, on Monday (September 1).
The investment return is sufficient to encourage total revenue of life insurance industry to a positive level, although total premium income slightly below last year’s achievement, which in the first quarter of 2014, rose by 11.5% to IDR 76.60 trillion. “The growth is driven by the good business management by our members and significant increase in investment return in life insurance industry,” said Hendrisman.
Meanwhile, total premium income reached IDR 53.58 trillion, slightly below the achievement of the second quarter of 2013, which was recorded at IDR 54.94 trillion, or down by 2.5%. this decline, according to Hendrisman, is caused by a decrease in the purchase of single premium products. With slowing economic growth and change of government, consumers tend to take a “wait and see” attitude before deciding to purchase financial and protection products, especially those closely linked to stock market performance.
In contrast, revenue from advance premium continues to show positive performance with an increase of 25% compared to last year which reached IDR 23.01 trillion from IDR 18.42 trillion. It shows customers’ confidence and knowledge of life insurance products, which are long term protection products. Increase of awareness and confidence of customers in the life insurance industry can also be seen from the decline in claims surrender by 14.2% compared to the second quarter of 2013. Acting Executive Director of AAJI, Togar Pasaribu, said that total payment for death claims and health claims increased significantly. Total payment for death claims rose 7.4% over the same period last year, from IDR 2.52 trillion to IDR 2.70 trillion. And, total payments of health claims rose to IDR 3.39 trillion or 21% from the previous year.
Meanwhile, head of the Department of communications of AAJI, Nini Sumohandoyo, mentioned that, the number of group insurance in life insurance industry decreased by 44.4% compared to last year. This is due to the decrease in group insurance by 51.8%. “the decline was mainly caused by short term protection products, such as travel insurance, accident insurance, and others. The largest part is contributed by travel insurance. This condition is the same as in the first quarter,” he said.
Nevertheless, the number of insured individuals alone showed 6.5% growth. With the increase in the number of insured individuals and the decline in premium income, according to Nini, the community continues to demonstrate confidence in insurance products. Currently, total assets in the second quarter of 2014 reached IDR 299.22 trillion from IDR 257.83 trillion in the same period of the previous year. (E)
Business News - September 5, 2014