Chris Bendl, CEO, Zurich Topas Life


On regulatory and partnership opportunities

What is your assessment of the potential for Indonesia’s life insurance market?

BENDL: The market has significant potential considering the rapid rate of growth in the emerging middle class. There is little differentiation between insurance companies within the sector, so this enables new companies to be more distinctive and help the industry evolve. Distribution is one of the key challenges for those new entrants, however, as incumbents dominate most of the existing distribution networks. New players will need to offer unique products, source alternative channels and penetrate untapped markets to create sustainable and distinct positions. If insurers can tap into favourable demographic trends it will trigger unprecedented growth in the industry. Lack of available good local talent is another key challenge to overcome. Many insurance companies have entered Indonesia in recent years and they are all competing for talent, leaving a shortage in the market.

To what extent do you expect bancassurance to become a widely utilised distribution channel in the country? 

BENDL: Bancassurance is considered one of the channels with the highest potential for life insurance in Indonesia. The premium income generated from this channel grew by 33.7% in the second quarter of 2017, and bancassurance now contributes 43% of total premium income in the life insurance industry. While banks have been keen to build long-term partnerships with multinational insurers, the market is becoming more competitive. Banks are beginning to use their market power to optimise their own profitability, impacting the overall value generated from this channel. Integrating the sales forces of the banks and insurers is another challenge, as they are both driven by key performance indicators that may be conflicting at times. 

Important opportunities within the channel will come from tackling three points: first, insurers need to find a way to better integrate with banks, building a connected ecosystem that will ensure a long-term partnership. This is more cost effective than what is currently happening in the market, and it will also ensure business sustainability for both banks and insurers. Second, cross-selling and upselling between insurance and bank products needs to be seamless. Last, data analytics remains key to generating quality business leads. The main challenge in this realm is how the insurer can maintain the bank partners’ data security and ownership. Currently, this is heavily regulated on the bank side.

Which areas of Indonesia’s insurance regulatory framework are in need of improvement?

BENDL: Regulations are created to ensure the long-term sustainability of the industry. It may have an adverse impact in the short term, but all parties can reap the benefits over the long run. Since the Financial Services Authority was formed in 2011, we have seen regulatory transformation in the insurance industry. This has been seen as positive by many, but some improvements may be required in terms of the robustness and speed of adoption of new market practices. 

Technology is evolving quickly. A good example of this is the adoption of the internet of things. This technology has been used by many industry players to enhance their product offerings and serve as an enabler in new partnership deals. In terms of distribution, new disruptive models, such as independent financial advisors, have opened up alternative channels to be leveraged by insurers. This model has been successfully rolled out in more developed markets. All of these advancements, if regulated properly, will help boost overall industry growth. 

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