Since it implemented risk management and a new focus on corporate governance, the growth of PT Asuransi Jiwasraya’s (Persero) income reached IDR 394bn at the …
Since it implemented risk management and a new focus on corporate governance, the growth of PT Asuransi Jiwasraya’s (Persero) income reached IDR 394bn at the end of 2011. Its average premium growth is over 30 percent per year, equity has grown up to 39 percent, and the growth of return on investment stands at 20.52 percent. The company is growing fast, with over 150 years of history and experience behind it. Its development can be seen in the growth of its assets, profits and premiums.
The management’s decision to diversify channel distribution, rather than persist with the branch office system, was a crucial step. Bancassurance – the relationship between bank and insurance company – has had a significant effect on the growth of premium. An insurance product specifically designed for the protection of low-income services also has been launched through micro insurance.
Regarding risk management, Jiwasraya has a commitment to meet the needs of society, especially in matters of insurance coverage. That commitment is embodied in the company’s infrastructure and reliable marketers. The company has extensive experience in networking, and has recently implemented risk management and good corporate governance. Since 2008, those areas of the company have undergone major restructuring, making improvements across the board.
The long game
Jiwasraya realised that life insurance is a long-term business that requires long-term risk management. With this kind of business, the implementation of risk management is a fundamental requirement. It cannot be half-hearted; billions of rupiah has been expended to strengthen the system in an effort to fulfil the human resources and consulting service requirements.
According to Hary Prasetyo, Finance Director of Jiwasraya, the principle of risk management is applied in all areas of business; decision-making must be careful, learned and thorough. Conflicts of interest, and other potentially damaging occurences, must be avoided. Implementation of risk management and good corporate governance has encouraged all related parties to improve efficiency and work effectively. “It’s not easy to change work patterns that have been embedded for many years. That said, this is a chance to be better,” says Hendrisman Rahim, President Director of Jiwasraya.
As a result of its efforts, the company has succeeded in collecting various industry awards, including World Finance’s Best Insurance Company in Indonesia for three consecutive years, Best Insurance Company in Indonesia from Global Banking and Finance Review, Digital Brand of the Year from Infobank Magazine, the Superbrand Award, Global Customer Satisfaction Standards from SWA Magazine, and most recently was named Company with the Best Management of Risk by Business Review.
Pioneering Indonesian micro insurance
In 2012, Jiwasraya is trying to reach the top five of the life insurance industry in Indonesia by setting a target premium of IDR 6.9trn. According to Marketing Director De Yong Adrian, Jiwasraya has implemented strategic measures to accelerate market penetration, such as:
- Building a long-term fundamentals portfolio. In this case, regular unit links are specified for the retail products unit, and employee benefit plans are specified for the group.
- Improving the quality of human resource competency and providing continuous training for employees.
- Creating better service claims.
- Establishing alternative distribution channels such as telemarketing to decrease the cost of market penetration expense. This programme started in February 2012.
- Collaborating with other companies in selling insurance coverage. Collaborations already exist with PT Telkomsel, Mandiri Bank and BTN.
- Developing a synergy alliance with general insurance to provide benefits to the public.
- Launching the ‘General Agency System’ to the public as an opportunity for income.
As a state-owned company, Jiwasraya has the responsibility to pioneer micro insurance as the product for low-income people in Indonesia. It has taken up this mantle, developing partnerships with banks known for their microfinance specialisations. Strategy is needed not only in the marketing sector, but by supporting units to improve services, for instance in system management information. The improvements that have been incorporated into the company already are parts of the management’s commitment to implementing risk management and good corporate governance consistently and in all areas of the business.