According to the Indonesia Life Insurance Association, the Indonesian life insurance industry experienced a year-on-year increase of 9.2% in total gross income over the first quarter of 2016. Total invested assets grew by 4.7% with a general growth across almost all asset classes except for a decline of 5.7% in equity investment. Total claims paid by the industry dropped by 4.8% compared with the first quarter of 2015. There were no new life insurance licenses in the four-month period ending 31 August 2016. Milliman’s Richard Holloway, Halim Gunawan, and Iwan Juwono offer more perspective in the latest Indonesia Life Insurance Newsletter.
According to the 2015 market statistics released by the Indonesia Life Insurance Association, the life insurance market in Indonesia experienced a modest growth in weighted new business premium of 4% in 2015 after a decline of 3% in 2014. Over the five-year period from 2011 to 2015, the industry experienced a compounded growth of weighted new business premium of 7.2%. In terms of market share, Prudential Life Assurance remains the leading player with a market share of 21% of weighted new business premium in 2015. Distribution of life insurance in 2015 continued to be dominated by the agency channel and bancassurance. Milliman’s Halim Gunawan, Iwan Juwono, and Richard Holloway offer more perspective in the latest Indonesia Life Insurance Newsletter.
The latest issue of Milliman’s Indonesia Life Insurance Newsletter highlights developments in the country’s life insurance industry from September 1 through December 31, 2015. To download a copy of the newsletter, click here.
Milliman has announced that it will open an office in Kuala Lumpur on March 1, 2016. The Kuala Lumpur office will offer employee benefits, life, nonlife, and health insurance consulting services. Milliman has two other offices in South East Asia—in Jakarta and in Singapore—and now 12 in total in the Asia-Pacific region.
Steve White, Milliman chief executive officer (CEO) and president, says, “The opening of the Kuala Lumpur office continues Milliman’s expansion into South East Asia. Our newest location enhances our ability to deliver Milliman’s unique expertise in insurance and employee benefits to the Malaysian market.”
Richard Holloway, Milliman managing director, South East Asia & India, Life Insurance, says, “Our third office in South East Asia will complement our other locations in the region. With the opening of the Kuala Lumpur office, we are better positioned to serve both our multinational clients and our local Malaysian clients, working for both life insurance and family Takaful companies.”
Pang Chye, who leads Milliman’s Health and Nonlife Insurance consulting practices in Greater China and South East Asia, said, “We see a lot of development and plans to liberalise the market in Malaysia, such as the impending motor rate detariffication, and the vibrant dialogue between health insurers and healthcare providers. We continue to help our clients in Malaysia adapt global best practices to the Malaysian environment and are reinforcing our commitment by adding Kuala Lumpur to our network of offices across Asia.”
Danny Quant, Head of Employee Benefits, Asia and Middle East, added, “There’s growing need for employee benefit consulting in Malaysia. We are thrilled that Milliman now has a Kuala Lumpur office from which we can answer that need.”
In June, the Indonesian Life Insurance Association (AAJI) announced a 28.5% growth in gross premium for the first quarter of 2015 as compared with the first quarter of 2014. The AAJI also revised its growth forecast for the full year of 2015, revising it down to 20% from a previous range of 23% to 29%. Additionally, in August, the Financial Services Authority announced that, following recent developments in the capital markets, it is temporarily reducing the minimum solvency ratio to 50% from 100%, as calculated by the required risk-based capital norms, at least until the end of the year. Milliman’s Richard Holloway and Iwan Juwono provide more perspective in this newsletter.
Milliman today announced the availability of new research into the implications of the transition toward the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC). With the AEC commencement quickly approaching at the end of this year, Milliman has examined the market characteristics and regulatory environments in each ASEAN country and has launched the Milliman ASEAN Liberalisation Index (MALI), a tool that characterises each member-state’s progress toward the more harmonized regime envisioned when AEC was originally conceived.
MALI is intended to provide a holistic and relative view of each ASEAN life insurance market, covering aspects such as regulatory openness, alignment to international standards, ease of doing business, and adequacy of policyholder protection. The higher the MALI score, the greater the state of liberalization. As may be expected, Singapore has the highest MALI score, confirming the view that it has the most advanced life insurance industry in ASEAN.
“Many insurance executives in the region view the move toward the AEC as advantageous for the industry in the long run, presenting more opportunities for cross-border sales and better exchange of talent,” said Richard Holloway, Milliman’s Managing Director of South East Asia and India Life. “However, each member country faces unique challenges. We are introducing MALI to help the life insurance industry across the region better understand commonalities and differences between the markets and develop appropriate strategies as we advance toward a more unified regime.”
“The requirements and deadlines of AEC as originally conceived may not be attainable short-term,” said Michael Daly, principal and consulting actuary in Milliman’s Hong Kong office. “We may see the emergence of a slimmed-down framework, leaving room for current differences while paving the way to greater integration in the long term. This report details those challenges and helps to identify a way forward.”
To see the full report, click here.