The Financial Services Authority (FSA) reported that the growth of Indonesia' commercial insurance premium during 2019, rose 8.0 percent to Rp281.2 trillion (US$20.09 billion) from a year ago - Photo by IIF

JAKARTA (TheInsiderStories) – The Association of Indonesian Life Insurance reported total life insurance revenues in the second quarter (2Q) of 2019 rose 31.9 percent to Rp118.32 trillion (US$8.33 billion) comapared tp 2Q 2018 worth of Rp89.73 trillion, said the association on Wednesday (09/11).

But, chairperson of the organization Budi Tampubolon explained, in the 2Q of 2019, total premium income edged down 3.6 percent to Rp90.25 trillion from the same period of last year Rp93.58 trillion.

He continued, 60.5 percent of the total premium income was contributed by new businesses Rp54.7 trillion and advanced premium of Rp35.68 trillion. The new businesses revenues slowing down compared to last year, influenced by slowing performance of the bancassurance distribution channel dropped 16.8 percent and agency channels by 8.6 percent.

The total income of the life insurance players was also influenced by return on investment which increased by 373.4 percent to Rp22.84 trillion compared to last year’ period. It is caused by the strengthening of Jakarta Composite Index (JCI) in early 2019.

While the total assets in the 2Q of 2019 increased 10.1 percent to Rp550.38 trillion, compared to 2Q of 2018 Rp499.96 trillion. During the 2Q of 2017 until the 2Q of 2019, the total assets of life insurance experienced an average growth of 5.6 percent.

Life insurance’ return on investment income over the past year plunged 84.5 percent from Rp50.45 trillion in 2017 to only Rp7.83 trillion. This is contrary with the conditions in 2017 which recorded an increase of up to 48.6 percent compared to the previous year.

Ex 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 JCI 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 noted, 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 Sumaryono 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 revenues in 2018 reached Rp204.89 trillion. This income fell 19.4 percent compared to 2017 of Rp254.22 trillion.

US$1: Rp14,100

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