500,000 Indonesian Life Insurance Agents

After seeing a slump in revenue last year, companies in the domestic life insurance sector are upbeat that business can grow by a healthy margin this year due to the declining trend in time-deposit rates and the rising popularity of micro insuranceIndonesian Life Insurance Association (AAJI) chairman Hendrisman Rahim said the business group was convinced that the volume of nationwide life insurance premiums could grow by about 15 percent this year, despite the weak economy.

The government’s recent effort to reduce lending rates, Hendrisman said, had created a situation in which interest rates on banks’ deposits were low, leading people to seek better yields on their investments.

“More people will be attracted to unit-linked products offered by life insurance firms, because we are also shifting our investments to instruments with higher returns due to the decline in time-deposit rates,” he said.

Furthermore, he said premium growth this year would also be driven by the expansion of agents across the country, with the number of licensed agents expected to increase to at least 750,000 people this year, from a total 500,000 listed last year.

He said the agents would help promote micro life insurance to people outside large cities as those types of insurance products had seen a rise in popularity due to high affordability, at less than Rp 50,000 (US$3.70) per insurance policy.

The campaign would also be helped by the industry’s concerted efforts to have 10 million agents in the future as endorsed by the government, in order to increase the country’s insurance penetration, which stood at below 2 percent last year.

According to the AAJI’s published report, the nationwide life insurance industry booked a 5.8 percent year-on-year (yoy) increase to Rp 128.6 trillion in premiums as of 2015, from Rp 121.6 trillion a year earlier.

The country’s weak economic growth had affected life insurance firms as their premium growth in 2015 was lower than the 6.7 percent yoy growth between 2013 and 2014.

AAJI executive director Togar Pasaribu said the results had affected total life insurance revenue last year, which dropped by 20.9 percent yoy to Rp 132.7 trillion, from Rp 167.7 trillion booked in 2014.