Prashant Pramhans: Yes, welcome to this discussion and podcast, Antony.
Antony Japari: Thank you for inviting me.
Prashant Pramhans: And I believe you’re keeping safe and well.
Antony Japari: Thank you!
Prashant Pramhans: We are here to take down some notes of some of your point of views which possibly will help the Indonesian industry to learn from it and re-establish this trust in positivity and possibly as we sail through this pandemic as of the moment.
Antony Japari: Okay, I will try as a representative of the Association of Life Insurance.
Prashant Pramhans: Great! So let’s just start with my first question to you. What would be your view on the current state of the market in the Insurance Industry and how do you see life insurance contribution towards the national economy?
Antony Japari: Okay so if you look at the comparison of the performance of the Q4 2018 and Q4 2019 life insurance Industries, it can be seen that there is an increase in performance. This can be seen from the following data. First total Q4 premium income reached IDR 196.69 trillion; an increase of 5.8% compared to the previous year IDR 185.88 trillion where the increase was due to an increase in total new business premiums by 5.8% and continued premiums by 5.9% compared to Q4 2018. Second total assets reached IDR 566.67 trillion; an increase of 9.4% compared to Q 2018. The total investment in the life insurance industry also increased by 8.6% to IDR 501.63 trillion. Third, the number of insured Q4 reached 64.34 million people; an increase of 19% compared to Q4 2018, which was caused by an increase in the number of groups insured by 28.3%. The number of individuals insured has decreased by 0.1% in Q4 2019. Fourth, the Bank Insurance Channel had the largest contribution to the total premium of 42.7% followed by the Agency and Alternative Channels with contributions of 39.8% and 17.5% respectively. Fifth, the three marketing channels namely Bank Insurance, Agency and alternative channels showed an increase compared to the previous year of 5.4%,6.6%, and 5.1 %. Sixth, the number of marketers increased by 9.2% to six hundred thirty-nine thousand seven hundred forty people in Q4 for 2019. 91.3% of this number came from Agency Channel marketers. AJI will continue to strive to maintain public confidence by recruiting marketers who are reliable and qualified. So if we see the fact from the data, the life insurance industry is still growing every year but on the other hand Insurance penetration, Indonesia, currently only reached about 6-7%. This number is still very small compared to Indonesia’s population of more than 265 million people but only 1.7% has insurance. Look at this data; I see the prospect of life insurance in Indonesia to grow is still very large. I see the contribution of life insurance to Indonesia’s national economy is quite large, especially at the pace of Indonesia’s economic growth. But I also see the role of the industry is still not getting enough attention when compared to other Financial Industries such as banking. According to Indonesia’s Financial Authority, the insurance industry has a significant role in supporting the national development process. Through the accumulation of long-term funds in large commands, this, in turn, becomes a source of development funds. In addition, the Insurance industry also has a role in supporting the community in facing the risks they face every day, especially when they start and run their businesses. Based on data from the Central Statistics Agency or gross domestic product or GDP, the financial services and insurance sectors in 2018 reached 4.17% of the national GDP of IDR 14,837 trillion. So if insurance growth decreases, it will have a quite significant impact on Indonesia’s national economy. That’s my answer.
Prashant Pramhans: Okay. So as you rightly said that the penetration for insurance and out of the population, it is only about 1.7%and as we recently saw the life insurance industry records revenue of about 243 trillion in 2019. So considering that there are certain industries; they have considered that 2020 is a year that is to be written off for their business and for the industry. How do you think 2020 would be for insurance as an industry in Indonesia?
Antony Japari: In 2020 Indonesia will still be affected by the Covid-19 pandemic. I see like Insurance growth will be blind compared to 2019. The new policy itself may only be 50% compared to 2019. Life insurance company investment will also decline because the Indonesian Capital Market is also experiencing the blind quite deep between the end of December 2019 and March 20 2003 Jakarta Composite Index has dropped by around 37-38% and claims will increase as well their claim and help claims. All sectors affected by the Covid-19 pandemic include the Life Insurance Industry. I think the recovery stage will start at the end of 2020 or early 2021.
Prashant Pramhans: So while we might have seen some spike in terms of quick Revenue increase for a few of the companies in the insurance industry, but as you see that it is going to decline within 2020 considering that is impacting everybody’s income overall scale. So considering this covid-19 situation is fueling the moment towards digital and branchless insurance. And certainly what I see personally is that most of the companies in Indonesia, or they have been heavily dependent on agency-driven/ agent-driven sales in terms of the quality and still they could only reach out to 1.7 percent of the population and get them on this part covered with insurance. So how are you seeing this in terms of the acceptance of the digital technology and how much time possibly as per you will take for getting into practice in terms of sales and also powering the agents primarily to adapt to digital sales methodology?
Antony Japari: In 2020 when the covid-19 pandemics struck in the countries in the world including Asia, something called The New Normal; the fresh new normal refers to change in human behavior after this pandemic where the coronavirus or Covid-19 pandemic changed the daily life for most people. So during and after the Covid-19 pandemic, there will be a new normal or new human behavior that is different and changes from the previous behavior or all normal, among others more concerned with loneliness by always using a mask to cover the mouth and nose when traveling and always hand washing with him; care more about health by maintaining immunity through regular exercise and eating nutritious food, more limiting meeting in person with others. True regular access and eating is worth or limiting meeting in person with others within worship, study work, and shopping; whereas in the UN, it is mostly done online. Distance with others when using public transportation and queuing in offices and shops. Thus Life Insurance company smiles also adjust to the condition of this new normal and this covers all aspects of the insurance company. On the Frontline, more sales will be met online even though the distribution in all normal face-to-face selling such as agency, insurance, and employee benefits. Insurance agents will meet their prospects online not at the office, at the cafe, or at the prospects home Bank Insurance officers will also meet prospective customers online not at the bank. Employee benefit cells will also make presentations online not in the companies prospect offices anymore. In the bank offices, the operational process will also be done online and paperless. The underwriting process is carried out without a hard copy of the life insurance request letter or SPIJ we call it and Unwritten Based on data sent from the agent’s smartphone or laptop directly to the underwriter’s PC. The policy will be issued electronically and no longer print hard copies. The delivery will also be via email and notification via WhatsApp. In the claims sections, claims will be signed by e-form and go directly to the PC of the claim section. All documents attached are also paperless. At present, the board of director’s approval has been done via email nowhere signature is needed. Especially in the current work from home situation which forces the process so digital and bank insurance will be accepted by insurance companies as a necessity. Insurance companies must adapt to digitization in order to survive and continue to grow.
Prashant Pramhans: Great I think rightly mentioned part, Antony. And there are like say it will change the complete paradigm of the industry outlook in terms of insurance as an industry and in considering that we will still need to take a look that how the agencies or agents will play a role because their reach is to the last mile and possibly companies and insurance as a segment itself considering the bodies also. All the financial body, or maybe the OJK and Insurance Association of Indonesia itself, so that there have to be certain significant steps in terms of bringing those agents of asking and maybe training them towards digital technologies and how they connect to maximize the reach and an effort towards recovering the overall industry by 2021 in that case. So Antony you yourself being a member of the Board at Indonesia Life Insurance Association, and my next question would be that how do you see this insurance Indonesia Life Insurance Association and some of the agencies like some of the other associations like an AAJI helping the Insurance Industries or companies to grow in this particular point in time and adapting to the digital transformation and also in ensuring that agents also grow with them.
Antony Japari: Okay, I need to explain a little who AAJI is? The Indonesian Life Insurance Association or abbreviated as AAJI is a container and holding and channeling the aspiration of life insurance and the insurance companies in Indonesia all that in 2002. Currently, AAJI consists of 60 life insurance companies in Indonesia and five insurance companies in accordance with the mandate and authority under the law of 2014 concerning insurance or the insurance law. AAJI has authority in the preparation of business ethics and code of conduct standards, the formation of risk profiles and mortality diversity as well as the implementation and the termination of agencies applications. All AAJI members are registered and supervised by Indonesia Financial Services Authority or OJK. Several things that have been done by an AAJI to support the growth of healthy and manage life insurance industry by prioritizing the principles of good corporate governance include-first is to coordinate with regulators in relation to the socialization of the prevailing laws and regulations so that AAJI members always receive timely information and have a good understanding of the laws and regulations and are able to carry out their obligation in the orders with the laws and regulations. Second- encourage all AAJI members to provide products in accordance with the needs of the community by always referring to applicable laws and regulations as well as providing the best service for all customers, including conducting comprehensive product location and transparent explanation including risks and benefits of the product. Third, radically report on industry development based on financial performance data 70 by members. Fourth, in line with holding the mandate and trust of the community and as an effort to increase the level of literacy and Community inclusion of life insurance products and to be able to vector serve our members spread throughout Indonesia. Currently, AAJI has confirmed the management of AAJI branches spread in Java, Mataram, Kalimantan, Bali, and Sulawesi. The implementation of literacy and inclusion programs throughout Indonesia involve member companies and sixth publish mortality for a table at the end of 2019 as a reference for the one insurance industry in producing premium rates more accurately in accordance with the current pictures of Indonesian Society. So besides that; as well as I know our AAJI has communicated with Kochi and came to propose this online or non-face-to-face sales process to the agency. So I think OJK is still processing the proposal. We still await the answer from the OJK.
Prashant Pramhans: Great! And considering certainly the industry itself would require a certain rapid action plan to come out of this situation also looking at long-term feasibility in terms of the models which need to be implemented. So as per you same right now all the companies which are into survival mode and certainly whose leaders had these companies has to come out with strategies to sustain but ultimately be aim will be to grow so growing not from the dipped situation but growing from the situation when they were at their best at the time before pandemics. So as per you what could be one growth model which should be implemented across the companies to the benefit of the overall industry in insurance and towards the society because ultimately as we are talking about 1.7% of the population. This time would have also given a listen to most of the people within the country that there is something which we will have to cut down the cost of some of our other items and invest into Insurance to take care of such a situation which is prevailing at this point in time?
Antony Japari: Yeah, as we know some common growth strategies in business include market penetration, market expansion, product expansion, diversification, and acquisition. Insurance companies have a different strategy depending on the fission and in the life cycle stage where the life insurance company is located. For some new companies that are still in the growth stage for example Capital life; the strategy used is Market penetration. Market penetration is a growth strategy in which the company focuses on selling products in existing markets, but the penetration aims to maintain or increase the market share of products that are already owned. These can be achieved by a combination of competitive pricing strategies advertising, sales promotion, and perhaps more personal resources dedicated to selling. So Capital Life strategy is still in the growth model but because of this pandemic situation we have to adjust a little bit in the survival mode as well as you mention, but in our mind, we still have been in the model growth models and in growth strategy.
Prashant Pramhans: So Antony, again from the perspective of your involvement with the Indonesia Life Insurance Association, and you keep talking to all the industry leaders across insurance companies. How do you see this shift in consumer behavior towards buying an insurance policy of going power to post pandemics?
Antony Japari: During this pandemic, the insurance company’s customers are policyholders also changed. They prefer to meet online or not face-to-face. The services provided are also done online and paperless. So the use of technology is becoming dominant today. Now, the meeting is done by using Zoom, Google Meets, or Microsoft Teams. When an Insurance request letter is in soft copy the insurance process is done online and the policy is also sent in soft copy via email and WhatsApp. I see services offered by companies such as Netcore solutions for many companies including insurance companies. It happens that capitalizing is working with a solution which is one of its WhatsApp solution products. So I know that Netcore is a leading marketing technology company that offers a solution for enterprises that define digital marketing and price communications. Netcore’s WhatsApp helps us a lot to connect with our prime policyholders. So that can help us to do with the change of behavior of the customer, our prime customer, policyholders.
Prashant Pramhans: So from the innovative campaigns, I think that you think that WhatsApp is one channel, which will bring the revolution in terms of delivering the policy one time, talking to the customers, and handling the customers to theory in that matter for the insurance companies.
Antony Japari: Pardon. Can you please ask again?
Prashant Pramhans: What would you see as per like Innovative campaign or Market penetration strategies is to be undertaken by the insurance companies to combat current market scenario organization. There is a forceful implementation of digital transformation.
Antony Japari: I don’t know about the other insurance companies so I can’t explain what marketing to be is their use, but at capitalized we do four things always check policyholders condition communicate with them regularly through telephone WhatsApp or email focus on prime policyholders understand the policyholder’s needs and provide support to the policyholders need and do the best effort to fulfill it. So that’s what we do now in this situation.
Prashant Pramhans: And how do you see it from the market overall Market perspective as per your way maybe if you could name a few of the companies who they have picked up very well in terms of the Covid situation.
Antony Japari: Okay. This is a good question. Actually, I don’t know the answer if we succeed but I believe companies that focus on customer service and are happy nobody’s strength even lasts. Companies that have a good strategy and execute good human capital, such as the creepy professional competent and especially customer-oriented technology, can win the market from other life insurance companies and become the winner after this pandemic is over. So this is my answer.
Prashant Pramhans: How has been the overall discussion and meetings online over the Zoom within the association maybe; is it something that some of the members are coming together on Zoom call and talking something on the industry level shift or change.
Antony Japari: Yeah, of course. We just did the meeting of our board meeting I mean, but still are in the financial and literacy department only through Microsoft teams last week. So that’s the way we have to do now
Prashant Pramhans: Awesome. So that’s all I think for this interaction part Antony and thank you so much for your time. And I think it will certainly value towards the industry or the people who they want to learn your views and certainly would help also people to wake up in Indonesian environment to cut down some of the unnecessary cost, put towards something into insurance so that they are prepared with such kind of an emergency situation which has gone for the world altogether.
Antony Japari: It’s my pleasure.
Prashant Pramhans: So here we conclude this podcast with Antony, being a board member at Indonesia Life Insurance Association who had sailed all the Imports and his views of how the industry together is leading towards change and possibly will take into consideration all the digital methodology of selling the insurance policies and bringing the community together and helping the society to uplift themselves in terms of any further pandemics or any such emergency situations in future. Thank you so much.