| SUPPLEMENT
12
WEDNESDAY July 17, 2013
LIFE INSURANCE
There is huge potential in the Indonesian insurance market, with the nation boasting a population
of 240 million people, but it remains untapped.
Lack of public awareness, partly caused by inadequate information and an attendant poor understanding of insurance-related issues, has been cited
among the major causes. This in itself presents an opportunity for companies to educate the public on the
value of insurance in their lives.
The Jakarta Post, in collaboration with Avatar
Global Limited, a finance consultancy company, begins today the publication of a regular special edition
on life insurance to provide in-depth understanding
of the industry and benefits to consumers and as a valuable reference for the industry.
The special edition, to appear in the third week of every
month, will focus on different topics.
An expert view on life insurance issues will be presented in a
special column in each edition. Contributed articles from insurance companies and related firms are welcome, as long as they
meet editorial standards.
We hope this special edition will serve as a valuable reference
for insurance companies and investors in exploring the insurance potential of Indonesia.
—The Editor
More start to sign on the dotted
line to become insurance agents
Sudibyo M. Wiradji
THE JAKARTA POST/JAKARTA
It takes smarts, the fine art of persuasion and also a high threshold
for rejection to get others to sign up
for an insurance policy, especially in
facing the low awareness of the benefits of insurance in Indonesia.
But some consider it their calling in life, including Sylviana
Kintan, an insurance agent at
AIA Financial and this year’s Top
Agent of the Year in the industry
awards organized by the Indonesian Life Insurance Association
(AAJI).
She sees it as more than simply
sealing the deal.
”Explaining about life insurance
to get people to understand is a good
and noble job. That’s why I decided
to study it seriously and become an
insurance agent. Being an insurance
agent is my main job,” said Sylviana.
“Assisting people in understanding life protection makes me happy.”
The mother of two, who previously worked in a beauty salon selling cosmetics, starts the day taking
care of household tasks before doing her job from noon until the late
afternoon.
“Once in a while there are customers who want me to give a
presentation at their house in the
evening. But mostly, I give a presentation at noon to make it more
effective,” she said.
Being rejected by customers is
natural in sale process, she said.
”But I see it in a positive way,
which means that I still need to
learn more because if I didn’t I
would feel down.”
She said the best recipe for an
insurance agent in being successful
was friendliness.
”But of course, I have to explain about life insurance well
and honestly. I also must work
according to the rules and regulation set by an insurance company I work with.”
It’s clear that word of the profession’s benefits is spreading.
JP/Vicky Dwiwardhana
Courtesy of PT Prudential Life Assurance
Sylviana Kintan
Fatah Malik
AAJI data shows the number of
licensed insurance agents in 2012
was 303,115, compared to 254,463 in
2011, an increase of 19.12 percent.
Fatah Malik, an insurant agent at
PT Prudential Life Assurance, is one
of them. The winner in the “Rookie
Agent Top Policy” category acknowledged that low public understanding
of the importance of life insurance
was the main challenge – and also opportunity – facing insurance agents.
“Currently only around 4 percent of Indonesians have access
to life insurance. This challenge
makes this profession more interesting where we need to convince
potential customers about the importance of life insurance to protect
against risks to the financial goals
in every life stages,” he said.
Like Sylviana, Fatah also enjoys
his work, although initially he was
not attracted to the profession.
“After I have experienced it, I realized that it’s not only selling insurance policies. Indeed, we become a
consultant for our customers’ future
financial protection. When the insurance policy is issued, it doesn’t
mean that our work is done. We
have the duty to give them advice,
financial planning and also maintain
relations with our customers,” he
said.
Fatah considers the plus point of
becoming an insurance agent is that
the profession helps develop knowledge of financial planning.
“Insurance agents are not restricted to monotonous work schedules, as they can manage their own
working hours. Beyond that, an insurance agent can have unlimited
income opportunities,” he said.
Growing importance
Sylviana, Fatah Malik and other
agents are crucial in developing the
insurance business in their respective companies because they are the
people who directly face customers.
The AAJI has set a priority on
the growth of professional and
dedicated licensed insurance
agents. An increase in public understanding of the importance of
insurance, which will in turn boost
its the penetration in society, will
largely rely on an adequate number of insurance agents to allow
for coverage of people in different
layers of society.
Insurance companies honored in
the Top Agent Awards held in Bandung recently also acknowledged the
importance of their employees on
the front line.
“I think the respect of the agent
is really a reflection of the training standard and the development
that has been invested in the agent.
We have a very high standard in
terms of professional agent selection and development,” said AIA
Financial president director Carl
S. Gustini.
He unveiled the company’s plan
to invest more money, time and efforts to develop agents, including
providing professional training and
supporting materials, to ensure
“they are doing a very good job in
meeting the Indonesian people’s life
insurancee needs”.
To take
ke advantage of the future insurance
urance growth in Indonesia, the company plans to recruit
more agents
gents and provides them
with professional
ofessional careers in life
insurance. On top of that, the
company will also work in close
partnership with banks regarding
the sale of life insurance products
through what is called the bancassurance scheme.
“But most importantly, our business model resolves around having
a long-term relationship with customers,” he said.
PT Prudential Life Assurance
corporate marketing & communication director Nini Sumohandoyo
said that in line with insurance industry growth in Indonesia, it is important for insurance agents to be
the “face” of the company.
She said that Prudential Indonesia
would keep developing its insurance
agents and staff professionalism to
continue giving the best service to
the Indonesian public.
She said that the company is committed to recruiting and training
more agents to support AAJI’s target to have 500,000 agents by the
end of 2015.
Rapid development of information technology has also been embraced by insurance companies to
improve their services.
Prudential Indonesia, for instance,
has developed an online portal for its
customers, PRU access, which offers
simple process, enabling customers
to track their claim information and
have transaction features.
“We are certain that by simplifying the processes, it will bring
positive impacts on our business
growth,” Nini said.
The AAJI has set a
priority on the growth
of professional and
dedicated licensed
insurance agents.
Identifying the essence of contributions
by insurance agents in Indonesia
In the highly competitive and
ever-changing financial services
market, buyers of insurance or
financial services expect more
from their insurance sales agent;
information, expertise and professionalism. Buyers of insurance
will continue to demand more and
more value in the products and
services they purchase, as well as
in the relationship they have with
their insurance sales agent. This
demand for professionalism will
continue to intensify as the insurance ambit continues its prolific
climb in sophistication.
As a consumer of insurance, it
is in your interest to find a suitable
insurance agent to handle your financial needs and security. You, the
consumer, have in turn the responsibility to provide fair and honest
information about your insurance
needs and financial status.
It is fairly easy to become an average insurance agent. To become
a trusted and professional agent, on
the other hand, is entirely a different matter. Financial service providers in Indonesia generally agree that
every professional relationship and
transaction in the financial services
industry is ultimately founded, facilitated and maintained on trust and
professionalism.
According to leading international publications, industry experts
and insurance companies themselves, professional agents all over
the world aspire to attain the title of
“trusted agent”. The trusted agent,
by definition, aspires to attain the
highest authority within the financial services industry.
To facilitate an environment,
push a particular product just to
complete the sale. He should, as a
matter of practice put his recommendations in writing.
A professional agent should display the following attributes in advice to you as his valued customer:
• Guide you through the claims
process for a prompt and fair
resolution of your claim.
Garth Ibbetson and Eddy K A Berutu • Help you solve problems related to your coverage and
specific financial needs.
in which trusted agents flourish,
• Explain the cover options
takes a lot more than just regulaavailable to you through his
tion to professionalize financial
agency, at your request.
services. Insurance companies,
• Return your phone calls and
academies and leaders will need
e-mails promptly and respond
to develop a generation of insurto your requests in a timely
ance agents whose approach to
professional manner.
what they do and how they be• Treat you with respect and
have is fundamentally based on
courtesy.
a simple philosophy of trust and
• Be committed to lifelong
professionalism, meaning that
learning and education and
the agent consistently displays
accreditation in insurance
a high level of insurance knowlbest practice.
edge, consistent learning, accred• Consistently set a high standard
itation, skill and aligned ethical
of work ethic and commitment.
conduct.
When trust and professionalism
Professional insurance advisors will usually offer or propose is established as the fundamena broad spectrum of products that tal foundation of successful client
specifically suite your current fi- relationships, the same relationnancial needs, they will also have ship can last over many years. This
access to more than one insurance foundation of trust highlights the
company, offer competitive pricing, importance of an ethical characobjective advice and valuable advo- ter as the hallmark of the trusted
cacy. Critically, a professional agent agent and it emphasizes that trust
is required to put the interest of the is, and will always remain a criticlient ahead of his own fiscal inter- cal component that defines the intention of a professional insurance
est or commission.
Trusted agents are usually the type agent.
Importantly and perhaps not
of professional that treats you as a person and not just a policy. Importantly, fully appreciated is the fact that
they should at all times treat your fi- insurance agents form the back
nancial needs holistically and not just bone of poverty alleviation with-
in Indonesia. This poverty relief
is highlighted by the fact that in
2012, 302,000 insurance agents secured the financial future of families in Indonesia to the tune of Rp
63,355,351,460,000 (inclusive of
claims).
This effort represents a significant contribution to the overall
fiscal health of the Indonesian
economy whilst at the same time
providing financial relief to people who have not only lost the
family breadwinner but have been
saved from almost certain financial hardship.
This effort is not only augmented by the financial contribution
of insurance agents but is also
exemplified by true professionalism, and dedication to customer
centric needs analysis, education,
financial awareness and literacy.
All these attributes will, on a fundamental level, serve to uplift
the financial services industry in
Indonesia for many decades to
come.
The writers are co-founder &
managing partners of Avatar Global
Consult. Avatar Global Ltd is a financial services consulting and advisory entity, with the implementation
intent of creating massive strategic
advantages for clients being part of
its fundamental strength.
Breathing new life into
the insurance industry
Simon Panggabean
CONTRIBUTOR/JAKARTA
Indonesia has experienced rapid growth of insurance over the
past five years, with the purchase growth ranging from 20 to 30
percent. Even further growth is expected from the low and middle
income segments, where insurance coverage remains an unknown
quantity.
Indonesian Life Insurance Association (AAJI) chairman Hendrisman Rahim said assets of life insurance reached Rp 900 trillion
over the past five years, while for 2012 the premium value reached
Rp 102 trillion.
Despite the rapid growth, many people still do not have life insurance. Only 11 percent of the country’s population of 240 million has a life insurance policy, compared to Malaysia’s around
25 percent.
With many people, particularly from the low and middle income,
not covered by life insurance, insurance companies still have room
to grow. Several insurance companies are expanding by targeting the
middle and low segments with more affordable products and lower
premiums.
Hendrisman expressed optimism that micro insurance products will
be welcome by low and middle segments. The hampering factor in this
sector is the people’s poor awareness or inadequate knowledge about life
insurance.
“Our challenge is to educate this potential segment so they are aware
of the importance of protection provided by life insurance companies,”
he added.
According to Hendrisman, such expansion is meant to provide financial protection to middle and low income individuals and households currently with no protection.
“This segment has not been touched [by life insurance] and that’s
why many insurance companies have started to target this segment,”
he said.
He explained that such micro insurances are made simple
with affordable premiums and easily accessible via micro financial institutions, rural banks (Bank Perkreditan Rakyat - BPR) or
cooperatives.
He said that for such micro insurance products, the premiums are
affordable, between Rp 5,000 and Rp10,000 per month or adjustable to
one’s income.
“Hence, these micro products are very accessible to the residents of
smaller cities because so far only the large or major cities’ residents are
enjoying insurance coverage,” he said.
Meanwhile, AAJI executive director Benny Waworuntu said
the association targets a 20 to 30 percent revenue growth for
2013 compared to Rp 107.73 trillion in total value of premiums
in 2012.
“The 14.38 percent increase in premiums in 2012 was a bit slower, compared to 20 percent in 2011. However, we are optimistic that
the increase this year will be about 20-30 percent, like in 2011,” he
said.
Cost reduction
According to Benny apart from being supported by the country’s economic growth, the association will also reduce the cost of licensed exams for insurance sales persons from upward of Rp 110,000 to upward
of Rp 80,000 for new sales person.
The cost reduction will be available for new agents or existing agents
resitting exams. This way the cost is more affordable and will increase
the number of certified sales people, which are targeted to increase by 30
percent — reaching 400,000 agents this year.
He is also optimistic about this year’s premium target as an increase of
agents and the reduced cost of certification will create more competent
agents.
The total income or revenue of the insurance industry in 2012 grew
and reached Rp 133.15 trillion, which is a 20.4 percent increase compared
with Rp110.36 trillion in the previous year.
The contribution to the revenue was 80 percent in the form of premiums or Rp 107.73 trillion compared with Rp 94.19 trillion in the previous
year.
Premiums from new business contributed almost 70 percent amounting to 11.28 percent increase or Rp 75.01 trillion, while maintenance premiums contributed 32 percent at a growth rate of 22.17 percent totaling
Rp 32.72 trillion.
AAJI research division chairman Maryoso Sumaryono is confident the
industry is capable of maintaining its positive achievements along with
the country’s current economic situation.
“In view of the industry’s total revenue of Rp 133.15 trillion, I am certain that as [we will see] as much as Rp 107.73 trillion — or a growth of
14.38 percent compared with the previous year of only Rp 94.19 trillion —
which means more customers are now interested in insurance products,”
he said.
Revenue from new business contributes almost 70 percent and an increase of 11.28 percent amounting to Rp75.01 trillion while existing products contribute 32 percent with a growth rate of 22.17 percent totaling
Rp32.72 trillion.
In the portfolio of new products in 2012 the premium of traditional products contributes about 52 percent out of the total portfolio
while the contribution of new business from unit link products is 48
percent.
When viewed from existing premiums, unit link products contribute
about 62 percent out of the total of existing products and 38 percent is
contributed by traditional products.
“This clearly shows that consumers, especially individuals understand
the importance of protection given by life insurance in long term financial
planning. Consumers are smarter in choosing the products that match
their financial needs,” he said.