1. Asia is again celebrating Insur-
ance Day on Oct. 18. This year’s
focus will be on promoting aware-
ness of the insurance industry and
its inherent career opportunities
to our next generation of leaders,
those between the ages of 18 to 25,
says Christian Wanandi, chairman
of Insurance Day 2013.
Research tells Avatar Global
Consult Limited that the current
workforce within the insurance sec-
tor consists mainly of those in the 35
to 54 age band. Importantly Central
Statistics Agency (BPS) data on pop-
ulation statistics indicate that the
under-24 age band (approximately
109 million) remains a largely un-
tapped resource pool for the finan-
cial services sector.
The financial services sector is
constantly searching for young,
adaptive and versatile talent inher-
ent to this age band. Given this and
the way in which technology seems
to be molding the X and Y genera-
tion, some interesting observations
have been made.
Based on research by Nielsen more
than 50 percent of the Indonesian
population uses at least one type of
mobile telecommunication instru-
ment.
Indonesia has one of the largest
Internet societies on the planet with
more than 39.1 million people access-
ingtheInternetatanygivenmoment,
with around 65 percent accessing the
net via mobile phone technology.
2011 saw Indonesia positioned
as the second largest Facebook
network globally, importantly this
Facebook inclination has seen mas-
sive growth, from around 30,000 in
2006 to 41.7 million in 2011.
Twitter users in Indonesia have
exceeded 6 million with an average
of 250 followers per account
With the above statistics in mind
it is obvious that the technology-
savvy youth have a long and bright
future ahead of them, the missing
link in this equation seems to be an
intrinsic awareness of the benefits to
financial freedom and the planning
thereof. This missing link becomes
more relevant if aligned to current
globalfiscalinstabilityandsovereign
debt issues, specifically in Europe
and the United States of America.
This sustained economic instability
could well influence the fiscal future
of many other countries including
that of Indonesia. A secondary ef-
fect of this type of phenomenon
could lead individuals into financial
uncertainty and/or instability.
Individual fiscal instability is
acutely compounded by the sudden
death of a breadwinner in a family.
Death is something not easily dis-
cussed and therefore the topic, and
its potential consequences, is often
avoided (often referred to as the “it
willneverhappentome”syndrome).
This said, the fundamental question
still remains – what would be the fi-
nancial consequences of a death or
critical illness in any given family
at any given time? Does the fam-
ily have enough disposable in-
come to sustain the lifestyle they
have become accustomed too? If
the answer is no, then appropri-
ate financial planning is required
immediately, if not addressed,
children’s education and other
basic living fundamentals could
be severely effected.
The solution to this unfortu-
nate event is a rather simple one. A
life and critical illness policy at the
right cover levels will provide a cash
injection post event, to sustain the
family’s current standard of living.
The premium of said policy affords
flexibility and affordability and is
therefore relatively simple to sus-
tain. The ultimate benefit however
could prove vital, specifically when
it comes to surviving a critical illness
or balancing debt in the event of the
loss of a breadwinner.
InsummarythevisionofInsurance
Day is not only to promote awareness
of the importance of appropriate life
and critical illness cover but to high-
light the many opportunities that lie
within the financial services industry
when it comes to career choice and
aligned career satisfaction.
Careers in sales, marketing, fi-
nance, medical underwriting and
actuarial science are some ex-
amples of the type of career path
that lie within the insurance in-
dustry. These careers offer excit-
ing prospects for growth and ad-
vancement and importantly offer
substantial rewards to the young,
active and productive generation
of Indonesia.
A sales career is not only a great
incubation environment for bud-
ding entrepreneurs, but offers sig-
nificant financial rewards to those
with a good work ethic, disci-
pline and drive. Importantly, sales
agents form a vital link between an
insurance company and potential
consumers.
Graduates of Actuarial Science
in particular are highly sought after
within the Indonesian financial ser-
vices sector. Indonesia is significant-
ly behind in graduates of the science
when compared to global averages
and although this path of study pres-
ents some significant academic chal-
lenges to the graduate, the demand
and resultant rewards for this type
of skill are massive.
So if you see yourself as part of the
picture described above why don’t
you start today in investigating your
financial security? You may also be
amazed at what lies ahead in terms
of career opportunities.
Happy Insurance Day!
The writers are co-founder &
managing partners of Avatar Global
Consult.
Garth Ibbetson Eddy K A Berutu
|| SUPPLEMENT FRIDAY October 18, 2013 12
Aulia R. Sungkar
CONTRIBUTOR/JAKARTA
The growing middle class and in-
creasing public awareness of insur-
ance have led to a rising demand for
various insurance products.
Correspondingly, the need for in-
surance agents is on the rise. This
has created a demand for more qual-
ified agents, as an agent should not
be limited to marketing and sales,
but also educating clients on how
insurance plays its role in providing
the right solutions for clients’ pro-
tection and future financial needs.
Looking at this phenomenon,
the Indonesian Insurance Council
(DAI) has raised the bar on human
resource competencies in the insur-
ance industry.
As quoted on its website, the
council, under the coordination of
the Capital Market and Financial
Institution Supervisory Agency
(Bapepam-LK), drafted National
Working Competency Standards
(SKKNI) for the insurance indus-
try.
The draft led to the establish-
ment of the SKKNI decree issued by
the Manpower and Transmigration
Ministry (Menakertrans) in April
this year, highlighting the objectives
of an insurance business that leads
to win-win solutions for clients,
from the underwriting process to
helping clients with advisory service
and making a claim.
The Indonesian Life Insurance
Association (AAJI), which was also
involved in drafting the SKKNI,
feels that the decree is necessary
as a reference point for insurance
agents.
“At present, the number of
certified agents in Indonesia is
around 328,000,” AAJI chairman
Hendrisman Rahim was quoted
by Antara news agency, and the
AAJI expects the industry to have
as many as 500,000 agents in 2014.
The AAJI is convinced that, with
SKKNI set as a competency stan-
dard, the increase in the number of
agents will be in line with the tar-
geted improvement in the agents’
overall performances.
Despite the presence of this new
standard, several insurance companies
claimtohavelongbeenoperatingwith
competent human resources on a par
withinternationalstandardpractices.
Orientation change
Nelly Husnayati, vice president
director and chief agency, employee
benefits and syariah officer of life in-
surance firm Asuransi Jiwa Manulife
Indonesia, asserted that insurance
companies had changed the orien-
tation of their agents by not limiting
them to simply being sales people.
“They are now functioning more
as financial planners and consul-
tants who help people identify their
future goals, and advise them on
how to realize their financial plans
in the future.”
Thus the potential to develop more
resources working for the insurance
sector is huge. “In saying that, the in-
surancesectorreallyneedsalotoftal-
ent to support the industry not only in
the distribution channels but also in
thebackofficerangingfromcustomer
service and operations, to underwrit-
ing and actuarial activities.”
In equipping and developing
its sales force, Manulife regularly
holds training programs designed
to enhance the competence of the
company’s agents and managers, to
streamline work processes and to
produce specialists.
“It is important for an insurance
company to create more deliver-
ables for its agents, as they are the
frontline people who represent the
company’s products and services. A
training program should focus on
boosting not only the sales force to
achieve higher growth, but no less
importantly, productivity and man-
power growth,” Nelly said.
The right guidance
Oemin Handajanto, chief execu-
tive officer of Zurich Topaz Life,
believes that as the insurance indus-
try grows, the standard of human
resources in the insurance sector is
likely to rise, not only in quantity but
also in quality.
“The talent in the industry will
amplify their skills and knowledge
to compete, and be the top dog. To
achieve this, you need to have the
right guidance,” Oemin said.
At Zurich, guidance means that
agents are not only going in with
a sales pitch when they meet pro-
spective clients. “It is crucial that
an agent is capable of analyzing the
needs of his or her prospective cli-
ent. This should be the first step be-
fore going to the next one, which is
advising on the products that fit the
client’s needs,” Oemin explained.
He stressed the importance of
an insurance company recruiting
competent agents through very
thorough selection procedures.
Those who passed the selection
should have the opportunity to
participate in continuous training
programs.
“Our development program is
designed as a training roadmap that
includes not only honing sales skills
but also building a solid relation-
ship with clients. To achieve this, an
agent must be able to deliver clear
product information to his or her
prospective clients. This way, we
can bring to the table what the client
expects from having an insurance
policy,” Oemin said.
Insurance industry takes on more
competent agents
“Good afternoon sir. Could I interest you in some life insurance with your
new deposit account?”
Walk into any bank branch these days and you
are likely to be approached by a smartly-dressed in-
dividual who will ask you if you have thought about
your financial future. They’ll then conduct some
form of analysis which will show you how much
you need to save/protect for that special occasion
you’re looking forward to in 10 years’ time. And
hopefully, present a compelling case for you to sign
up on the spot.
Welcome to bancassurance – the rising star in
life insurance distribution for Indonesia and many
other Asian countries.
Bancassurance is quite literally “insurance from,
or in, your bank”. Its original roots lie in Europe with France being the
first country to grant banks permission to market insurance products
during the 1970s. Today, bancassurance is universally available (to vary-
ing degrees) in pretty much every country with a significant life insurance
market.
Here in Indonesia, almost every bank has formed one or more part-
nerships or strategic alliances with insurance companies to aggressively
develop this important new sales channel. In many cases, banks and in-
surers have even formed joint-venture bancassurance companies such as
AXA Mandiri Financial Services, Bringin Life, BNI Life and CIMB Sun
Life.
So what’s all the fuss about? Why is bancassurance the fastest growing
sales channel for insurance?
First let’s look at some statistics. Swiss Re recently analyzed the
growth of bancassurance in several Asian countries over the five years to
2012 (note that for Indonesia, the statistics are only available from 2010)
As you can see, bancassur-
ance in Indonesia is running at
around 51 percent of total new
premiums for 2012. This is a
phenomenal transformation of
the landscape for a country that
has traditionally relied on insur-
ance agents as the main distrib-
utor for savings and protection
products.
So is bancassurance herald-
ing the death of the traditional
agent? Notatall!Infacttherapid
growth of the Indonesian market
means there is ample room for
both channels (and other, new
emerging channels such as direct
marketing and cyber-marketing)
to happily co-exist.
Take a look at the chart alongside, also from Swiss Re. This predicts
that life insurance premiums will almost triple over the next 10 years – so
there’s plenty of room for growth.
In fact, life insurance penetration in Indonesia is currently less than 2
percent - far below many of our neighbors such as Singapore (6 percent),
Malaysia (4.5 percent) and Thailand (4 percent).
That may not sound like a big deal, but given the prediction by various
experts that by 2030, Indonesia will have a total population of 290 million
with almost 50 percent - or some 145 million – categorized as “middle
class”, this is a market that will dwarf the rest of Asia other than China
and India. No wonder that Indonesia often replaces India as the “I” in
BRIC.
So bancassurance is clearly here to stay and grow, but what actually
makes it “tick”? Well, there are a number of factors at play here:
• One major advantage over the traditional agency channel is that it
gives the insurer access to a large group of customers via the bank’s
existing customer database, and branch network. Whilst data pri-
vacy regulations protects the bank customers’ information, the in-
surance advisors in the bank branches can work with their personal
banker and relationship manager colleagues to identify who is most
appropriate for this new service and how best to approach them ef-
fectively.
• The bank branch is usually seen as a more natural and logical place
to discuss financial affairs.
• Customers usually have a high degree of trust in their bank and are
comfortable with products and services that have been endorsed by
them and are presented in a professional manner by bank staff or
“Financial Advisors” from the insurance partner.
• Financial Advisors are usually paid on a mix of sales and service cri-
teria with some form of partner or employment contract. So there
can be less pressure for them to sell compared to channels that rely
purely on commission.
Of course there are benefits for the bank and the insurer as well. The
bank will be paid fees and commissions on sales to its customers and in
some instances, may even benefit from profit sharing in the more exclu-
sive partnerships, and the insurer can count on a stable business base.
So bancassurance is one of those rare win:win situations?
Yes, but of course it’s never as simple as that!
As with any major purchasing decision (arguably more so for some-
thing such as life insurance where you and your family’s future could be
so drastically impacted by anything going wrong), you need to ensure you
trust your advisor.
This doesn’t just apply to bancassurance but to the telemarketer who
calls you about the new cancer product on offer, your agent who wants to
tell you about his company’s newest product or the insurance broker who
wants you to look at this new insurance company that’s just launched.
Talk to your close friends and use the multitude of online forums, blogs
and information sites to increase your knowledge and confidence in the
area of finance and insurance. Whatever the sales channel, you should
always check the credentials and capability of the advisor and make sure
you trust their recommendation. It’s your future.
As to the future for bancassurance in Indonesia? Well, in 5 - 10 years’
time there will surely be even more banks selling insurance, including
syariah banks, rural banks, finance companies etc, plus even more joint
ventures and strategic alliances – which can only lead to even greater
growth in bancassurance.
However, in 10 years’ time you are unlikely to walk into a bank branch
to see anyone – far more likely that your age, health or a lifestage event
will trigger some form of Personal Digital Adviser hologram who greets
you over breakfast and suggests that you go online to top-up your life cov-
er or savings plan urgently!
John O’Rorke is expert panel.
Banking on insurance
Insurance as a next-generation career
Avatar Global Ltd is a financial
services consulting and advisory
entity, with the implementation
intent of creating massive strategic
advantages for clients being part of
its fundamental strengths.
LIFE INSURANCE
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50%
60%
Notes: Bancassurance as % of life premiums are calculated based on: Thailand: ordinary life first year premiums;
China: total life premiums; Hong Kong: individual life new business premiums of bank-affiliated life insurers;
India: individual life new business premiums of private insurers (FY 2007-08 vs FY 2011-12); South Korea: total
life premiums from general accounts; Singapore: weighted new business premiums; Malaysia: new business
premiums (2008 vs 2012); Indonesia: total new business premiums (2010 vs 2012).
Source: Swiss Re, Regulator reports.
Thailand China Hong Kong India Korea Singapore Malaysia Indonesia
John O’Rorke &
Eddy KA. Berutu