Life premiums to slump this year: AAJI

Life insurance premiums are set to slump this year impacted by the COVID-19 crisis, according to a statement by the Indonesian Life Insurance Association (AAJI).

AAJI chairman Budi Tampubolon said recently that the association expected the industry’s premium income to contract 2.5 percent year-on-year (yoy).  The life insurance industry’s premium income has contracted 2.5 percent yoy to IDR88.02 trillion (USD5.9 billion) in the first half of the year from the same period last year.

The decline in new premium income and renewed premiums has resulted in the lower figures. “Everyone is now focused on surviving. The second quarter was better than the first quarter but if the third and fourth quarter are similar to the second quarter, we will still see contraction this year, but just not too deep,” he said during a virtual press conference.

In comparison, the industry booked IDR196.69 trillion in premium income last year, up 5.8 percent compared to 2018, according to AAJI data. Insurance penetration in Indonesia has been low for a long time. According to the latest data from the Organisation for Economic Cooperation and Development (OECD), Indonesia’s insurance spending in 2018 was only 1.79 percent of the country’s GDP, lower than in neighboring Malaysia, where it was 4.4 percent. Despite the slowdown in premium income growth, Budi said the group saw improvement in new premium income in the second quarter of 2020 from the previous quarter.