The revenue of the Indonesian insurance industry is anticipated to rise by 30% in the second quarter of 2009 due to improving people's confidence and steadily recovering economy.
With the improvement in people's confidence in economy seeing the signs of recovery, the Indonesian life insurance industry is expected to see 30% rise in its revenue during Q2 2009, a slight rise in comparison of Q1 2009, said the Indonesian Life Insurance Association (AAJI), as reported by Jakarta Post.
The Association reveals that the total premium revenue will likely to climb up to Rp 34.19 Trillion (US$3.35 Billion) by the end of Q2 2009 compared to Rp 26.3 Trillion recorded in the corresponding period last year. The revenue in the first quarter of 2009 posted an increase of 26%, reaching Rp 16.8 Trillion (US$1.65 Billion) from the same period a year ago.
During tough economic conditions such as the current slowdown, people postpone their plans of investing in life insurance products and even encash their existing policies to meet their urgent monetary needs. However, industry experts are optimistic of insurance industry's recovery in the remaining quarters of this year as the stock market has rebounded with the index coming back to the level of over 2,000.
Moreover, the Indonesians have once again been showing confidence in the life insurance products, owing to the attractiveness of unit-linked insurance policies. Policies that encapsulate features of both insurance and investment still have strong demand which shows that people are keen to purchase them. .
However, the growth in the industry is even then slow as higher number of Indonesia's exporting companies are either collapsing or slowing down their production operations in wake of reduced demand in the US, Europe, Singapore and Japan. This is further affecting the purchasing power of the individuals and companies to purchase insurance policies.
However, the gross premium income is expected to display moderate growth in 2009 as most of the companies will shift their orientation export towards the domestic market. A Senior Research Analyst at RNCOS said, "With the stabilization of the rupiah, there should be decline in the interest rates in the Indonesian life insurance market. To continue the growth trend in the industry, rising index should be maintained. Further, the conditions will get better in future with the signs of recovery already started appearing."
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