Interview: Jens Reisch
Compared to five years ago, how much more aware are Indonesians about insurance?
JENS REISCH: Looking back, there has been clear progress compared with a few years ago, in part due to the help of digital and social media. This phenomenon is increasing access to information, especially in rural areas. Another aspect that has helped, particularly in the past three years, has been the new social health insurance law, which has raised the awareness of the benefits of medical coverage. For industry players, it is both an opportunity and a responsibility to provide a path to financial literacy and inclusion. With the help of social media, by partnering with banks and having a strong agency force, we can reach a lot more people.
Clearly awareness is improving, but more can be done as penetration remains very low. For a population of more than 250m people, roughly 50m have insurance coverage and around 18m have individual life insurance. The next step is to reach out to schools and educate young people on money management and protecting whatever they have. If we keep working on financial literacy and inclusion, the industry will take better advantage of the potential in this market.
How are digital tools impacting the sector?
REISCH: Being able to reach out digitally via social media is clearly an advantage. Having digital tools permits us to reach more remote areas of the country, allowing insurance agents and advisors to provide services, make sales and recruit with a simple internet connection. Our agents work in real time. If you are in Papua and fill out a form with all the required documents, your insurance e-policy can reach you in minutes, which is quite an achievement. If we want to recruit an agent, it only takes a short time to send the agreement, do the online exam, train and equip them with the tools they need to advise potential customers. All of this is a big advantage, which was not available five to seven years ago. In addition, the awareness of protection is increasing thanks to rising levels of information, as digital access to basic insurance products is making a big difference for a sizeable part of the population.
What remains the biggest challenge in reaching the more remote areas of the country?
REISCH: One challenge in rural areas is premium collection. Indonesia is quickly developing many small-scale outlets providing premium collection services. E-payment systems are improving, and this is a great opportunity to expand service to lower premium segments and rural areas. Another challenge is in reaching the entire population of such a widespread country. Indonesia has tens of thousands of villages spread around the countryside, and even the largest companies today cannot reach all of them. There should be a continuous effort by all to increase the awareness of how important life insurance is as a priority for Indonesian families.
How would you assess the regulatory framework provided for the insurance industry?
REISCH: The regulator for financial services, the Financial Services Authority (OJK), was established in 2013, and has since issued several regulations per year. The regulator has done a lot to facilitate financial soundness and consumer protection. The development of the sector, as a whole, is a lot stronger now. All market players welcome this, and it is helpful to have stakeholders with sustainable practices and long-term roles. Especially in insurance, being able to pay claims quickly and efficiently is crucial for our reputation. Thus, reducing financial risk and increasing consumer protection and transparency is extremely important. The industry and the regulator need to be prepared to face any future sector trend, whether it is in social media, digital payment systems or communication tools. It is important for industry players to work closely with the OJK, have constant dialogue and shape this dialogue to the advantage of Indonesians to increase insurance penetration.
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