The life insurance industry is pinning its
hopes on younger clients to boost its business as it plans to recruit more
insurance agents.
The industry expects to book 15 percent growth in premium income in 2016 and had achieved half of that target by June. Growth of 15 percent would bring the full-year premium income figure to Rp 148 trillion (US$11.41 billion).
“We need to recruit as many new agents as possible to provide information about insurance at universities,” Indonesian Life Insurance Association (AAJI) communications head Nini Sumohandoyo said during a press briefing on Monday.
It apparently does not hurt that university students apply to be insurance agents as well at the events, opening the door for the life insurers to reach younger customers.
The AAJI has previously acknowledged that agents traditionally rely on family or friend networking to market various insurance products and has held job offerings at universities since August.
The life insurance sector currently has 507,000 licensed agents and plans to recruit 17,000 more before the end of the year. The new recruits are especially important for the industry because its latest data show that growth remained constrained up until the first half, reflecting the sluggish economy.
The overall premium income only rose by 10 percent year-on-year (yoy) in the January to June period, whereas the same data soared by almost 30 percent yoy in January to June 2015.
New premiums—which are usually an important source of growth—only climbed by 10.8 percent, as opposed to the 28.2 percent growth a year ago.
“We are upbeat that business will still grow at a 10 percent to 30 percent rate, whatever the situation is,” AAJI chairman Hendrisman Rahim said, reiterating the industry’s optimism.
He pointed to the positive returns on its investments, which the AAJI considers an important performance indicator.
Investment returns, according to the first-half data, stood at Rp 21.92 trillion. This reversed the situation exactly a year ago, when the life insurers posted Rp 710 billion in investment losses.
The AAJI attributes the result to the positive movement of the stock market. Data from the AAJI reveal that mutual funds still made up the largest portion of its investments at 33.4 percent, followed by government bonds at 14.5 percent.
However, Hendrisman said that it had begun allocating, albeit slowly,a higher portion of its investments to government debt paper (SBN) to comply with a regulation put in place by the Financial Services Authority (OJK).
The regulation requires insurance companies and pension funds to place at least 20 percent of their investment portfolios in SBN by the end of 2016.
The ratio will then increase to 30 percent in 2017. SBN amounted to 14.5 percent of the life insurers’ investments by the end of June.
The association has predicted that insurance companies and pension funds will need to purchase government bonds worth around Rp 25 trillion to comply with the rule this year.
Data from the OJK show that life insurers in the country had only placed 20.7 percent of their investments, equal to Rp 58.6 trillion, last year.
The OJK estimates that the non-banking industry’s investment allocation in government bonds could amount to Rp 286.2 trillion by 2020.
Responding to the possibility of using financial technology (fintech) to garner more insurance premiums, Hendrisman said the association had no plan to use fintech in the near future. “Selling insurance needs the personal touch,” Hendrisman said. (wnd)
The industry expects to book 15 percent growth in premium income in 2016 and had achieved half of that target by June. Growth of 15 percent would bring the full-year premium income figure to Rp 148 trillion (US$11.41 billion).
“We need to recruit as many new agents as possible to provide information about insurance at universities,” Indonesian Life Insurance Association (AAJI) communications head Nini Sumohandoyo said during a press briefing on Monday.
It apparently does not hurt that university students apply to be insurance agents as well at the events, opening the door for the life insurers to reach younger customers.
The AAJI has previously acknowledged that agents traditionally rely on family or friend networking to market various insurance products and has held job offerings at universities since August.
The life insurance sector currently has 507,000 licensed agents and plans to recruit 17,000 more before the end of the year. The new recruits are especially important for the industry because its latest data show that growth remained constrained up until the first half, reflecting the sluggish economy.
The overall premium income only rose by 10 percent year-on-year (yoy) in the January to June period, whereas the same data soared by almost 30 percent yoy in January to June 2015.
New premiums—which are usually an important source of growth—only climbed by 10.8 percent, as opposed to the 28.2 percent growth a year ago.
“We are upbeat that business will still grow at a 10 percent to 30 percent rate, whatever the situation is,” AAJI chairman Hendrisman Rahim said, reiterating the industry’s optimism.
He pointed to the positive returns on its investments, which the AAJI considers an important performance indicator.
Investment returns, according to the first-half data, stood at Rp 21.92 trillion. This reversed the situation exactly a year ago, when the life insurers posted Rp 710 billion in investment losses.
The AAJI attributes the result to the positive movement of the stock market. Data from the AAJI reveal that mutual funds still made up the largest portion of its investments at 33.4 percent, followed by government bonds at 14.5 percent.
However, Hendrisman said that it had begun allocating, albeit slowly,a higher portion of its investments to government debt paper (SBN) to comply with a regulation put in place by the Financial Services Authority (OJK).
The regulation requires insurance companies and pension funds to place at least 20 percent of their investment portfolios in SBN by the end of 2016.
The ratio will then increase to 30 percent in 2017. SBN amounted to 14.5 percent of the life insurers’ investments by the end of June.
The association has predicted that insurance companies and pension funds will need to purchase government bonds worth around Rp 25 trillion to comply with the rule this year.
Data from the OJK show that life insurers in the country had only placed 20.7 percent of their investments, equal to Rp 58.6 trillion, last year.
The OJK estimates that the non-banking industry’s investment allocation in government bonds could amount to Rp 286.2 trillion by 2020.
Responding to the possibility of using financial technology (fintech) to garner more insurance premiums, Hendrisman said the association had no plan to use fintech in the near future. “Selling insurance needs the personal touch,” Hendrisman said. (wnd)
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