Indonesia's Life Insurance Association (AAJI) Chairman Hendrisman Rahim expects the growth of bancassurance to plateau in the coming years and that agents will continue to play a significant role in the foreseeable future.
According to the AAJI, bancassurance contributes 46% of total premium income, while agency accounts for 37%.
The share of bancassurance premiums has increased slightly, and several new bancassurance partnerships were struck this year. These include the deal between Equity Life and Bank Pembangunan Daerah (BDP Bali); Victoria Alife and Bank Bukopin; Prudential Life and Bank OCBC NISP; and Central Asia Raya and Bank Ina Perdana. Meanwhile, Indosurya Life entered into partnerships with five banks and a multi finance company to provide credit life protection.
Given the fact that most banks have already secured partnerships agreements with life insurers in the market, Mr Hendrisman expects the growth of bancassurance to plateau in the coming years.
And while digital and other alternative channels are gaining much attention these days, Mr Hendrisman believes that agents will continue to play a significant role in the foreseeable future. The number of agents in the market stands at 603,000 compared to 530,000 two years ago.
“Even as the level of awareness is improving, a lot of people still buy insurance because of that emotional connection they have with agents,” he said.
Digital to complement agency channel
Nonetheless, Mr Hendrisman also believes that digital represents a good opportunity for insurers and would serve to complement the traditional agency channel.
“InsurTech and digitisation is a promising avenue for the industry because in a vast country like Indonesia, that connectivity allows you to get closer to customers as well as improve efficiency.”
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Aside from improved efficiency, it is also a source for insurers to improve the customer experience and provide value-added services – thus serving as a competitive advantage as product offerings are more or less similar today.
“The digital channel is still very small and has been used to promote simple products. It is something that the industry needs to embrace, although growth is unlikely to accelerate in the near future.
“And there are some constraints with regards to the existing laws, such as the admissibility of e-signatures in the eyes of the court, and we are in discussions with the regulator as well as the ministry of law on the possibility of reviewing certain aspects of the law to enable greater digital execution. We hope this would happen in the near future, if not next year,” he said.
In terms of outlook, he predicts the industry to register premium growth of between 10-15% this year.
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