JAKARTA (TheInsiderStories) – The Association of Indonesian Life Insurance recorded returns on investment income over the past year plunged 84.5 percent from Rp50.45 trillion in 2017 to only Rp7.83 trillion (US$559.82 million. This is contrary with the conditions in 2017 which recorded an increase of up to 48.6 percent compared to the previous year.
Chairperson of the association Maryoso Sumaryono explained, the issue of trade war that occurred between the United States and China became the main trigger of the decline in the return on investment income. The sentiment from the two giant economy disputed had a negative impact on the movement of the the Jakarta Composite Index throughout 2018, which fell 2.53 percent from 6,355 in 2017 to 6,194 in 2018. Meanwhile, in 2017 the Composite Index rose significantly to 19.99 percent.
He revealed that many life insurance companies invest the customer funds in stock portfolios directly or through mutual funds. The association recorded, share of investment in mutual funds still dominates around 34 percent, then shares 33 percent, Government Securities 14.4 percent, and deposits 8.6 percent.
But Maryoso optimistic that the growth of investment returns this year could be positive, along with the improvement in stock market conditions. Whereas the selection of investment instruments is highly adjusted for the company’ liquidity and the movement of these instruments.
Meanwhile, Head of Investment Department Iwan Pasila saw the portfolio placement in this year will not change and still be dominated by mutual funds and shares. Even so, he predicts the growth of investment returns has not been able to return as in 2017 which reached 40 percent.
At the same year, the association recorded that the life insurance industry’ premium income during 2018 slumped by 5 percent from Rp195.72 trillion in 2017 to Rp185.88 trillion. The declining in premium income occur because the public interest in buying insurance products is not as large as in previous years.
He explained that the decline in total premiums was also influenced by the decline in premium income from the bancassurance distribution channel which reached 11.2 percent. While, the contribution of bancassurance is actually quite high against the total premium income, which is 42.9 percent.
The total new business premium was recorded at Rp117.38 trillion in 2018. Whereas in 2017 the amount was Rp127.88 trillion. Then, for regular premiums over the past year amounting to Rp68.5 trillion or slightly higher than 2017 which amounted to Rp67.84 trillion.
Overall, the total life insurance industry revenue in 2018 reached Rp204.89 trillion. This income fell 19.4 percent compared to 2017 of Rp254.22 trillion.
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