Life Insurance Policy Increases by 3 Million
6/11/2022
The life insurance industry recorded the addition of more than 3 million policies and 11 million insureds in the first quarter of 2022. Thus, there are 20.87 policies and 75.45 million people protected by life insurance.
Head of Marketing and Communications at AAJI Wiroyo Karsono said the total policies reached 20.87 million, an increase of 17.4% year on year (yoy) or an increase of more than 3 million policies in the first quarter of 2022. Of the total policies, national life insurance has protected 75.45 million Indonesians or grew by 18.1%.
"This is a positive thing because we know that penetration in life insurance in Indonesia needs to be increased again. With so many policies, we hope that penetration will be better, so that it can be the same or even better than neighboring countries," said Wiroyo in the Life Insurance Industry Performance Report. Quarter I-2022, Friday (10/6).
Meanwhile, the total sum insured experienced a slowdown by 4.0% in the first quarter of 2022 to Rp 4,425.01 trillion. AAJI's analysis explains that an increase in the number of the insured that is not followed by a growth in the sum insured indicates a smaller average premium paid.
"This is an indication that interest in insurance from the middle-lower economic community is increasing. So the number of policies is increasing, but the average premium is lower, so the overall money insured becomes smaller. Wiroyo.
Chairman of the AAJI Management Board, Budi Tampubolon, said that there was a change in the preference for purchasing insurance products from the public, from the previous single premium to a regular premium . He believes that there is a tendency for people to start buying protection-based insurance products.
"This increase is indicated to come from micro insurance products, relatively small premiums are starting to be in demand by people in the middle-low income ," said Budi.
According to him, public awareness of the long-term protection of life insurance also tends to increase. claim surrender and partial withdrawal which decreased significantly, respectively 42.5% and 31.4%. "This, for us, indicates that the number of people canceling their policies has decreased drastically," said Budi.
Production Performance
On the other hand, Budi said, the life insurance industry posted a total revenue of Rp 62.27 trillion, down 0.6% (yoy). Whereas in the first quarter of 2021, total premium income rebounded 13,279.1% (yoy) from negative Rp 0.48 trillion to Rp 62.63 trillion.
"The depression in the total income of the life insurance industry tends to be caused by a decrease in the total component of premium income, reinsurance claims, and other income. Meanwhile, investment income has increased rapidly," he explained.
Based on AAJI data, regular premiums ( weighted ) were recorded at Rp 25.51 trillion, down 4.9% (yoy) in the first quarter of 2022. Likewise, the single premium fell deeper by 23.3% (yoy) to Rp 2.35 trillion.
Judging further, insurance products linked to investment (PAYDI) or unit links are one of the causes of the decline in life insurance production. Unweighted unit link premiums decreased 18.9% (yoy) to Rp 29.07 trillion, but still dominated at 59.30% of the total premium.
"The Covid-19 pandemic has put pressure on people's purchasing power so that the total premium income for the life insurance industry has decreased on average. Moreover, we remember that in the first quarter of 2022 there was a strict PPKM due to high Omicron cases," said Budi.
As premium production declines, the number of policyholders and unit link also declines. policyholders unit-linked decreased 8.2% (yoy) in the first quarter of 2022 to 6.12 million people. Meanwhile, the number of unit-linked decreased by 6.7% to 6.38 million people.
On the other hand, sharia life insurance premiums or contributions grew 18.2% (yoy) in the first quarter of 2022 to Rp 5.84 trillion. Budi said this good news shows that sharia life insurance products are increasingly in demand by the people of Indonesia because of the principle of mutual assistance and mutual protection between customers. Sharia literacy is also growing so that people's understanding of sharia life insurance is increasing.
Another positive trend was recorded investment returns which grew by 347.9% to Rp 10.81 trillion in the first quarter of 2022. This growth was supported by the positive performance of the JCI from 5,985.5 to 7,071.4. Considering that the placement of life insurance investments in the capital market in the form of shares and mutual funds reached Rp. 303.53 trillion or covering 56.51% of the total investment of Rp. 545.79 trillion.
