Life insurers perform well despite stragglers
June 26, 2008
Although a quarter of life insurers currently lie short of an impending capital requirement, the industry still managed to book a hefty growth in this year's first quarter, generating Rp 13.9 trillion (US$1.5 billion) in premium income.
The Indonesia Life Insurance Association (AAJI) said Wednesday income was up 61.1 percent from Rp 8.7 trillion in the same period of last year.
Executive director Eddy K. Berutu said the gain was largely generated by new businesses, which accounted for Rp 10 trillion, up from Rp 5.6 trillion in the first quarter of 2007.
"This shows that people's awareness of the importance of insurance has increased gradually amid the current unpredictable situation," he said.
The industry saw a total of Rp 6.52 trillion in claims in the same period, although the number of insurants, including individuals, decreased 25.71 percent to 25.7 million people from 34.5 million in the same period last year, Eddy said.
"Total claims were higher than last year but it was still normal as the premium itself also increased," he said.
The announcement came a day after an InfoBank survey found that 11 of 46 life insurers in the country fall short of a minimum capital requirement set to take effect by the end of the year.
Although he acknowledged the number, Eddy said the industry as a whole was performing quite well, citing as example a 38.4 percent growth in investment in this year's first quarter to Rp 91.9 trillion from Rp 66.5 trillion in the same period last year
"For the rest of this year, we're optimistic the industry will perform well although we still need to be very careful with the external situation," he said.
AAJI estimates that the overall industry will grow 25 percent this year helped by a huge potential market and product innovations from insurance companies.
In 2007, insurance companies generated Rp 44.4 trillion in premium income, up 67 percent from Rp 26.5 trillion in 2006.
There are 46 life insurance companies that are AAJI members, 24 of which are local companies and the remainder joint venture companies.
The government issued this year a regulation requiring all insurance companies to have a minimum capital of Rp 40 billion by the end of 2008.
The requirement will increase to Rp 70 billion by the end of 2009, and to Rp 100 billion by the end of 2010.
The InfoBank survey found that of 126 insurers in the country, 49 have less than Rp 40 billion in capital, including 11 life insurers.
Source :http://old.thejakartapost.com |
