With its microinsurance product, Allianz aims to bridge the wide gap between demand and supply for microinsurance in Indonesia. This gap was revealed by a recent microinsurance market study done by Allianz in cooperation with the GTZ (Gesellschaft für Technische Zusammenarbeit - German Technical Cooperation) and the UNDP (United Nations Development Program).
Currently, only 5 million of the 238 million Indonesians have an individual life insurance. Only about 20 million more are covered by group schemes. Despite these low numbers, the joint research shows a high demand for insurance among low-income households in Indonesia exists. However, the study also points out that conventional insurance is simply too expensive for the great majority of the Indonesian population, around half of which still has to survive on 2 US dollars or less per day.
Allianz - microinsurance for low-income households in Indonesia
Allianz is entering the microinsurance market in Indonesia. During a first pilot project, low-income families will be provided with basic life insurance. For most it is the first time ever to hold an insurance policy.
Bridging the gap between demand and supply for microinsurance in Indonesia
Jens Reisch: "microinsurance is a good way to combine corporate responsibility with a business opportunity"
Payung Keluarga - Life Insurance for 6,000 Indonesia rupiahs
"Payung Keluarga" (literally "Family Umbrella"), the microinsurance product currently being tested in a one-year pilot project, offers life insurance for as little as 6,000 Indonesia rupiahs (0.66 US dollars) per year.
Essentially, "Payung Keluarga" provides credit life insurance plus additional benefits for credit customers. First of all, the outstanding balance of the credit is waived in the event of death of the loan taker. This way the family will not be burdened with continuing to pay back the loan. As additional benefit, the family receives two times the original loan amount. This additional benefit helps the low-income family to easier overcome the financial crisis after the death of the breadwinner.
Distribution, premium collection and even claim settlement of "Payung Keluarga" is largely handled by experienced business partners from the microfinance industry such as Microbanks (BPRs), Savings & Credit Cooperatives and NGOs. The loans that these institutions disburse to their low-income customers usually range from 500,000 Indonesia rupiahs to 10 million Indonesia rupiahs (55 to 1,100 US dollars).
Jens Reisch, President Director of Allianz Life Indonesia maintains that "Payung Keluarga" benefits all involved parties: "With Payung Keluarga low-income households receive a level of protection they have never enjoyed before. Allianz’ usual premium rates of at least 100,000 Indonesia rupiahs (10.50 US dollars) per month are beyond these customers’ reach. Now, Payung Keluarga is much cheaper. For many customers, it will be their first insurance ever. Moreover, the benefit for our business partners is the protection of their credit portfolio against catastrophic risks."
"Allianz itself pursues three goals with its first microinsurance pilot in Indonesia", explains Reisch. "Firstly, we are testing a new potential market segment that can greatly enlarge our customer base. Secondly, we are supporting the government’s drive to provide access to insurance for a much larger range of people in Indonesia. Last but not least, microinsurance is a good way to combine corporate responsibility with a business opportunity".
Essentially, "Payung Keluarga" provides credit life insurance plus additional benefits for credit customers. First of all, the outstanding balance of the credit is waived in the event of death of the loan taker. This way the family will not be burdened with continuing to pay back the loan. As additional benefit, the family receives two times the original loan amount. This additional benefit helps the low-income family to easier overcome the financial crisis after the death of the breadwinner.
Distribution, premium collection and even claim settlement of "Payung Keluarga" is largely handled by experienced business partners from the microfinance industry such as Microbanks (BPRs), Savings & Credit Cooperatives and NGOs. The loans that these institutions disburse to their low-income customers usually range from 500,000 Indonesia rupiahs to 10 million Indonesia rupiahs (55 to 1,100 US dollars).
Jens Reisch, President Director of Allianz Life Indonesia maintains that "Payung Keluarga" benefits all involved parties: "With Payung Keluarga low-income households receive a level of protection they have never enjoyed before. Allianz’ usual premium rates of at least 100,000 Indonesia rupiahs (10.50 US dollars) per month are beyond these customers’ reach. Now, Payung Keluarga is much cheaper. For many customers, it will be their first insurance ever. Moreover, the benefit for our business partners is the protection of their credit portfolio against catastrophic risks."
"Allianz itself pursues three goals with its first microinsurance pilot in Indonesia", explains Reisch. "Firstly, we are testing a new potential market segment that can greatly enlarge our customer base. Secondly, we are supporting the government’s drive to provide access to insurance for a much larger range of people in Indonesia. Last but not least, microinsurance is a good way to combine corporate responsibility with a business opportunity".
Welcome initiative
Sabine Markert, GTZ Country Director Indonesia stated: "We welcome this Allianz initiative as a positive sign for private insurers to become more involved in protecting low-income households and ultimately reducing poverty. Microinsurance has the power to protect the gains that low-income households have reaped from the long-existing microcredit and microsaving programs in Indonesia. GTZ will continue to support this initiative and hope that it will serve as a model for other insurers."
One group policy covering 18,500 credit customers has already been issued to a Credit and Savings Cooperative in Tangerang. Within the next twelve months Allianz plans to achieve a total number of 50,000 insurees.
The success of this one-year pilot project will not only be monitored by Allianz and its business partners, but also by the GTZ. The GTZ, which has more than twenty years of experience in the microfinance sector in Indonesia, also assisted with product development and identification of potential pilot partners.
Upon successful conclusion of the pilot project, Allianz plans to establish microinsurance as a permanent business activity to complement its existing products ranging from life and health insurance to pension and saving plans.
One group policy covering 18,500 credit customers has already been issued to a Credit and Savings Cooperative in Tangerang. Within the next twelve months Allianz plans to achieve a total number of 50,000 insurees.
The success of this one-year pilot project will not only be monitored by Allianz and its business partners, but also by the GTZ. The GTZ, which has more than twenty years of experience in the microfinance sector in Indonesia, also assisted with product development and identification of potential pilot partners.
Upon successful conclusion of the pilot project, Allianz plans to establish microinsurance as a permanent business activity to complement its existing products ranging from life and health insurance to pension and saving plans.
About PT Asuransi Allianz Life Indonesia
PT Asuransi Allianz Life Indonesia was established in 1996, and offers life and health insurance solutions, unit link products and the pension plans (DPLK) for individuals as well as corporate customers. Today, PT Asuransi Allianz Life Indonesia operates a wide network of more than 70 agency offices throughout Indonesia in more than 43 cities, supported by 6000 financial consultants dedicated to serving some 280,000 policyholders. PT Asuransi Allianz Life has already grown substantially over the past twelve months, having increased its premium income in 2005 by 40 percent compared to the same period last year.
As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer, provided on the right.
For further information
