17,508 islands. 273 million people. 580 language dialects. 300 ethnic groups.

Indonesia is known for these eye-popping numbers, but there’s another number that stands out for different reasons: 3.23%. That figure represents the level of insurance penetration in the archipelago nation, less than half of the worldwide average of 7.3%. But, while low, the number is equally remarkable for how much it has grown from a mere 1.96% just eight years ago. And advisors in Indonesia believe it indicates the potential of growth in their country for financial services and insurance in the years to come.

“The Indonesian people’s perception of insurance has certainly shifted,” said eight-year MDRT member Dedy Setio, S.kom, CFP, of Jakarta. “When I first joined the industry, a great majority of the people disliked insurance. But over the years, some of them have started to be more open to talking about insurance.”

Ten-year MDRT member Herold, also of Jakarta, agrees with that assessment, and believes it represents a bright future for Indonesia as a whole.

“The low penetration rates and a growing, large population make Indonesia the market with the most potential in Southeast Asia,” he said. “This really makes me feel more optimistic.”

Both advisors concur that the COVID-19 pandemic has had a significant impact on people’s perceptions of, and attitudes toward, insurance. The Institute for Health Metrics and Evaluation estimates that more than 50% of Indonesia’s population had been infected with the virus by November 2021.

Pre-pandemic, Herold says insurance awareness already was growing, thanks to technological advances and an emerging middle class. In fact, before anyone had ever heard of the coronavirus, Indonesia’s insurance penetration had spiked to 2.84% in 2017. And in 2022, Herold sees even more opportunities, particularly as more people have become aware of their own mortality in light of the virus’ impact.

In fact, after Herold was diagnosed with COVID-19 himself, it gave him a new perspective on his work.

“It motivated me to improve my health physically and mentally, and I also embarked on a powerful journey with my customers, thanks to the ability to work safely and efficiently from home,” he said. “The pandemic affirms even more my care to the customers because this is the time that they need us the most.”

Setio has also noticed a shift in clients’ attitudes toward insurance.

“The current pandemic has definitely made even more people see this industry as something of great importance going forward,” he said. However, he notes that many people remain skeptical of whether their claim actually will be paid out. In response, he often shares his own experience: In one year, his wife had to undergo five separate surgeries, and the couple’s policies paid for all her medical bills, as well as an income replacement benefit.

“I have benefited from the products I’m selling myself,” Setio said, citing it as one of the reasons he’s committed to the financial services profession. “This experience convinced me to keep on sharing the miracle of insurance with everybody.”

As the pandemic begins to wane, Herold can see the long-term impact it will have in Indonesia. He says health insurance and critical illness insurance have become increasingly important offerings in the insurance landscape. Additionally, insurance companies have begun to execute a “pay in full as it is charged concept” in their products, which creates more security for clients.

And Setio has noticed that clients tend to gravitate toward traditional insurance products over investment-linked policies, likely due to the volatility of the markets. So now he prefers to focus on traditional products in his practice over the riskier options.

“Despite the longer coverage period an investment-linked policy may provide, a traditional product offers peace of mind,” he said. “Clients do
not have to worry about its value.”

But on a more personal level, Herold says COVID-19 has taught him an important lesson, derived from the characters in the Chinese word for “crisis” (危机). The first character represents “danger,” while the second translates to “opportunity.”

“I chose to overcome one and focus on the latter,” Herold said. “COVID-19 brings some opportunities for creating online meetings. This digitalization also provides us wider and bigger opportunities: Everywhere and at any time, we can reach our potential clients and prospects across the nation.”

He brings this same commitment to focusing on opportunity into his interactions with clients, particularly when he works with them to find any protection gaps in existing policies.

“I usually tell my clients that I don’t sell life insurance policies to them; I help them to buy the most suitable one to fill the gap,” he said. “This business should be considered a noble practice, not only helping to fulfill my own dreams, but also to protect people’s income and wealth when life’s risks happen to them.”

Contact

Herold herold@agency.aia.id
Dedy Setio dedy.mdrt@gmail.com