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The life insurance industry showed significant growth in the
first quarter of the year, with total premium revenue increasing by 62
percent to Rp 8.65 trillion (approximately US$959 million) from Rp 5.35
trillion in the same period last year.
The executive director of the Indonesian Life Insurance Association
(AAJI), Eddy KA. Berutu, said last Friday the increase was due mainly
to a 97 percent growth in premium revenue from new customers to Rp 5.56
trillion from Rp 2.83 trillion in the first quarter of last year.
"People's awareness about the importance of insurance is increasing and
the country's economic situation is improving. Therefore, people can
now set aside more of their money to pay for insurance premiums," he
said.
Of the total payments made on policy premiums, individual policyholders
contributed 83 percent, or Rp 7.17 trillion, while collective policy
holders contributed the remaining 17 percent, or Rp 1.49 trillion.
With its good first quarter start, the life insurance industry is
expected to experience more growth in 2007, Eddy said. He estimates the
number of policyholders will increase by 25 percent to 30 percent this
year.
During the first quarter of this year alone, the number of
policyholders increased by 8 percent to 34.54 million from 31.93
million at the end of 2006.
Forty life insurance companies in the AAJI reported to have 6.65
million individual and 27.89 million collective policyholders as of the
end of March, meaning that only approximately 14 percent of Indonesia's
240 million people are insured.
To increase this "still low penetration rate", AAJI announced that by
the end of June, the association will start a five-year "life insurance
awareness movement", which will be supported by its members along with
the Insurances Bureau of the Capital Market and Financial Institutions
Supervisory Agency (Bapepam-LK).
As part of the program, AAJI will run public advertisements and hold
talk shows in various cities, including in Jakarta and Bandung this
year.
"We hope the number of policyholders will dramatically increase with
this program," Eddy said.
During the press conference held by the association, Eddy said that in
the first quarter of this year, the life insurance industry also
experienced growth in investment revenue.
In line with a 41 percent increase of its total investment to Rp 66.48
trillion from Rp 47.05 trillion in the first quarter of 2006, the
industry booked Rp 1.39 trillion in revenue from the investment.
The total revenue of the life insurance industry rose by 57 percent
from Rp 6.5 trillion in the first quarter of 2006 to Rp 10.2 trillion
in the first quarter of 2007, increasing the industry's total revenue
to Rp 66.39 trillion.
The total amount paid out in insurance claims, Eddy said, rose by 40
percent to Rp 3.6 trillion.
He said that to run its business, the life insurance industry relies on
approximately 135,000 agents.
Marketing insurance products to bank customers (bancassurance),
although showing an increase, still only contributed to approximately
25 percent of the industry's marketing.
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