Vincent Lingga - Opinion Column

Executive column: For insurance, it’s business as usual in election year 

Jakarta   /   Wed, December 26 2018   /  02:48 am 

 

 

Jonathan Hekster (Manulife Indonesia)
Manulife Indonesia, the oldest foreign life insurance company in the country, remains upbeat about the outlook of the industry despite the political noise during the presidential and legislative elections next April, the global uncertainty and financial market volatility.
“We have operated here for over 33 years and we now serve 2.4 million customers. We have faced many uncertain situations and political elections, yet our business has never declined even in an election year,” Manulife Indonesia chief executive officer Jonathan Hekster asserted here.
Hekster told Vincent Lingga of The Jakarta Post that regardless of any situation, life risks come anytime. This is something that people need to be aware of and Manulife Indonesia will help them to anticipate those risks.
Below are excerpts from a recent interview in which Hekster charted out the challenges and outlook of the industry, including health insurance:

Question: How do you think the political noise during the presidential and legislative elections next year would impact the life insurance business in Indonesia?
Hekster: The political noise will have an impact only on the span of attention of the general public. Regardless of any situation, life risks come anytime, anywhere. This is something that people need to be aware of and we will help them to anticipate those risks. Therefore we remain optimistic that it won’t affect the way we run our business. Moreover, the market potential is quite huge as the latest data at the industry’s association show that life insurance penetration is only 7.1 percent of the estimated 260 million population. Hence, there is still huge potential to fulfill the insurance and protection needs of the different groups of people through the right insurance solutions. The association estimated the industry will grow by 20 or 30 percent this year and will most likely expand at a similar rate next year.
How do you meet the insurance and protection needs of the rising number of middle-class people and high net-worth (top rich) individuals in the country?
Manulife continues to design new products to meet the different needs of our customers: This year alone, for example, we launched three products: Manulife Education Protector (MEP), a regular-pay unit-linked insurance product to help parents plan for their children’s education, MiTreasure Optimax Protection (MiTOP) and Manulife Prime Assurance (MPA) to protect high net-worth customers and prepare them for legacy planning.
The latest Global Wealth Report data showed that there are an estimated 100,000 high net-worth individuals in Indonesia and this number is growing rapidly. A study by Baker McKenzie in 2017 found that more than 50 percent of family businesses in Asia were run by first generation, but only 3 percent of family businesses were run by third generation. Hence, MPA is designed as a comprehensive insurance product to help these rich people balance their lifestyle changes and financial management and to prepare the next generation to take over their family businesses.
Do you think the medical insurance component of life insurance firms could greatly complement the government’s universal health insurance program?
Indonesia’s National Health Insurance (JKN) program has been having a positive impact on the insurance industry by increasing the insurance literacy rate. Both insurance business players and the government have the same mission, which is to increase the people’s welfare with the right financial protection. In principle, the awareness of insurance in general needs to be improved. Manulife has operated in Indonesia since 1985. We understand the culture well. This is why we are maximizing every channel like TV programs for campaigning to promote a healthy lifestyle which is a key component of our medical scheme.
Could you describe the latest trend in the Manulife Sentiment Index?
Our latest Manulife Investor Sentiment Index or MISI survey in 2017 found that Indonesian investors critically underestimate future retirement costs. It revealed that while nearly all investors (96 percent) believe they will maintain or enhance their lifestyle in retirement, their savings are likely to fall far short of their spending, jeopardizing their financial security. Although they place a high priority on retirement planning, ranking it second to paying for their children’s education, nearly a quarter of investors (24 percent) allocate only 10 percent of their savings or less to retirement.
Could you reveal Manulife Indonesia’s performance for this year?
Unfortunately we can’t yet disclose our unaudited result for 2018. But the trend so far shows our performance this year will likely be as robust as last year. Our audited report for 2017 recorded greatly positive developments: Our new business premiums increased by 19 percent to Rp 4.4 trillion (US$314 million), total premium income rose to Rp 25 trillion, consolidated comprehensive profits almost tripled to Rp 2.6 trillion and risk-based capital (RBC) position was 582 percent for conventional business and 372 percent for Tabarru Sharia, both way above the regulatory minimum requirement.