Allianz Enjoys Solid Growth in Indonesia Microinsurance Business

Jakarta Globe, Arientha Primanita, Apr 17, 2015

Jakarta. German insurance company Allianz saw the number of its Indonesian micro-insurance clients surge by nearly half last year  as it expands its reach in Southeast Asia’s largest economy.

The Munich-based insurer provides insurance with premiums that start from as low as 1 euro ($1.08) a year for 3.8 million people in Indonesia, up 46 percent from a year earlier, according to the Allianz Group Sustainability Report 2014 published on Friday.

Allianz micro-insurance performance in Indonesia trails India, its biggest growth market with 39.8 million people insured, expanding 75 percent in 2014.

The two countries constitute almost all of Allianz’s $114 million micro-insurance business globally.

The company said that low incomes in developing country are the most vulnerable to risks associated with natural disasters, accidents and illness.

“The review in Indonesia showed that the beneficiaries of credit life insurance payouts were better off than the families of borrowers who left their debt behind uninsured,” Allianz said in the report.

“It also showed that when insuring female microloan borrowers, there was greater social impact when their husbands were also insured, especially since men are still the main breadwinners in Indonesia.”

In a separate statement, head of Emerging Consumers for Allianz Life Indonesia added: “In Indonesia, the high potential of micro-insurance needs  to be managed in a correct, innovative and efficient way.

“Government support for developments in micro-insurance must be balanced with regulations on the field, and  also boost insurance awareness among the Indonesian people.”

Business-wise, even though micro-insurance is not as profitable as conventional insurance products, Allianz believes that it is a preliminary step to introducing insurance products to mass market groups.

While still “immature,” the business is estimated to have a premium potential of $40 billion a year, Allianz said.

Micro-insurance customers have large potential as they can be at some point transferred into conventional insurance in line with the growing middle class.

The product can also help expand formal financial services to more customers. Market research conducted in 2013 covering micro-insurance customers on the Ivory Coast, India and Indonesia showed that it was the first insurance for 75 percent of the them.

“We anticipate that demand will continue to grow and so we are expanding our business in this area,” Allianz  said.

GlobeAsia