Significant Growth Recorded by Indonesian Insurance Industry in 2016

Jakarta (Antara Bali) - A significant growth was recorded for Indonesia's insurance industry in 2016, the Indonesian Association of Life Insurance firms has said.

The growth was reflected in the increase in income recorded by life and general insurance companies as well as sharia insurance companies, general chairman of the association Hendrisman Rahim said here last weekend.

The industry recorded Rp158.65 trillion in income in the first nine months of 2016 or an increase of 78.1 percent from the same period in 2015, Hendrisman said.

He said investment in the industry shot up 25.7 percent to Rp386.18 trillion in the January-September period in 2016 from Rp307.29 trillion in the same period in the previous year.

Hendrisman attributed the growth partly to rise in the sales of bancassurance, an insurance product offered through banks.

Marketing of bancassurance in cooperation of banks is relatively easier with targets the bank clients, who are more aware of financial services.

"Especially now a number of state banks which have formed strategic partnership with insurance companies have shown improvement in performance," he said.

Insurance practitioner Kapler Marpaung said cooperation between state banks with strategic partners is key to expansion of insurance industry.

Kapler cited BNI Life Insurance, a subsidiary of state lender PT Bank Negara Indonesia has continued to chalk up positive performance after it formed a joint venture with Sumitomo Life.

Similarly PT AXA Mandiri Financial Services (AXA Mandiri), a subsidiary of state lender PT Bank Mandiri has reported strong growth. Meanwhile Bringin Life , a subsidiary of another state lender PT Bank Rakyat Indonesia (BRI)has continued to business expansion by planning to team up strategic partner to develop the insurance product of bancaassurance.

The owner of FWD Group, Hanwha Life Insurance Co. and BNP Paribas Cardif have expressed interest in acquiring Bringin Life at a price of up to US$500 million although BRI did not show that it was eager to accept the offer.

Kapler, an economic lecturer at the state Gajahmada University said cooperation between insurance companies and strategic partners would make the country's insurance industry healthier and stronger.

"If BRI agreed to divest 40 percent of its insurance subsidiary to strategic partner, the performance of Bringin Life would improve much better," he said.

In 2016 Bringin Life, after it was taken over by BRI, set target for premium income growth at 40 percent from Rp2.4 trillion in 2015. (WDY)