Jiwasraya succeeds despite tough Indonesian life insurance market

In a changing economy and growing region, Indonesian state-owned Asuransi Jiwasraya (Persero) is finding ways to compete with bigger rivals

 
Asuransi Jiwasraya (Persero)
The skyline of Jakarta business district at dusk. The creation of the ASEAN Economic Community will lead to greater competition for the city's insurance providers 
Author: Hendrisman Rahim, CEO and Chairman, Asuransi Jiwasraya (Persero)
October 17, 2016

Age is not necessarily a guarantee of success in the field of insurance. Despite having a history that stretches back over 150 years, Asuransi Jiwasraya (Persero) has needed to work hard to remain successful in Indonesia’s highly competitive life insurance industry. While recent years have seen joint-venture companies dominating the sector, every year Jiwasraya has shown a tangible improvement in performance. This has been proven again in 2016, when Jiwasraya has been able to hold on to its second-place position in Indonesia’s life insurance market, the current leader being a joint-venture company.

While Jiwasraya is continuing to successfully compete with these large joint-venture companies, we have also successfully outpaced our local direct competitors. Among these local companies, Jiwasraya has become the largest life insurer in terms of premium income and assets. This was not an easy feat to achieve, and so I am certain Jiwasraya will also become the largest life insurance company in Indonesia and a leader among state-owned enterprises.

Competition among service companies that operate within the ASEAN Economic Community is unavoidable

This is a genuine, realistic goal within our reach. Jiwasraya has been able to grow between 20 and 30 percent faster than the average rate among Indonesian life insurers. In the second quarter of 2016, Jiwasraya posted significant growth compared to the same period in 2015, across a number of different metrics. The company took in $581.7m in income, an increase of 100 percent. Adding to this, Jiwasraya’s profit also grew, reaching $59.8m – an increase of 361 percent. Jiwasraya’s investments also grew, surging by 51.8 percent to $1.7bn. Likewise, assets recorded an improvement, growing by $765.4m to $2.4bn; the company’s new target is $3bn in assets by the end of the year.

High quality services, products, IT infrastructure and human capital have been the forces behind Jiwasraya’s record-breaking success. As a service company, Jiwasraya treats customers as a priority. As part of its corporate strategy to maintain high-quality customer service, the company has implemented a minimum service level agreement, which has proven to be successful in winning over new customers. It has also earned Jiwasraya a reputation as one of Indonesia’s most trusted insurers.

Competition increases in the AEC
The economic climate in the Asia-Pacific region is rapidly changing. Competition among service companies that operate within the ASEAN Economic Community (AEC) is unavoidable, and companies that are not ready will not survive, even within their home markets. Even before the AEC came into effect in December 2015, Jiwasraya began improving the quality of its services to win a greater share of the market. It’s a situation we’re familiar with, since Jiwasraya has already faced the challenges presented by competing with joint-venture insurers in Indonesia.

As competition is beginning to increase even further, Jiwasraya is ready to tackle the challenges it will bring. Customer service is our priority, and when people are making claims, we believe they should be handled efficiently and in accordance with our procedures. As per our service level agreement, if possible, all requirements for a claim should be received and processed, and the claim paid, within 14 working days. If Jiwasraya does not pay the claim properly, a penalty of one percent per month is applied to the company.

Jiwasraya is also committed to making information technology one of the key tools we use to accelerate efficiency. In the life insurance sector in particular, information technology can improve our service to prospective, current and former customers. So far, Jiwasraya has developed business efficiency targets the successful integration of information technology will enable us to achieve.

Broadly speaking, the goal of Jiwasraya’s information technology initiative is to improve connection and communication within the company. Jiwasraya’s operations consist of two head offices, one main regional office, 13 regional offices and 71 branch offices. These are all connected through an intranet, with the communication network centralised in the head office. This saves time and money, and also minimises the chance of mistakes. Jiwasraya has also implemented VoIP systems and video conferencing between regional offices and branch offices, in order to maximise possible savings in the company’s communication bill. To make this possible, Jiwasraya has completed a rejuvenation of its information technology infrastructure across all regional and branch offices. For customers, we have a 24-hour call centre where we can answer any of their concerns.

Asuransi Jiwasraya in numbers

$581.7m

Income 2016

$59.8m

Profit 2016

$1.7bn

Investments 2016

$2.4bn

Assets 2016

Jiwasraya is also currently implementing a Monetary Institute International Studies Development programme to improve the accuracy and speed of data that is used and maintained within the business. This development is in line with our 2014-18 IT master plan. By reducing the use of paper and favouring electronic messaging, our communication system is becoming more effective and efficient.

In terms of running our business, Jiwasraya is continuously looking to improve the risk management process implemented by the company. Constant and dynamic changes within the business environment make this a necessity. To ensure we respond to our company’s vision and missions, a risk management statement should be developed before we take on board any additional risk.

In every line of business and operation at Jiwasraya, the company engages in a thorough risk identification process before conducting any new process. Risk identification is conducted through a risk mapping system, which is based on the yearly operational budget that is approved at the annual shareholder meeting. After identifying the company’s full exposure to risk, a calculation is done to gauge what impact additional risks would have on the company’s risk capacity. Risks can be identified as being above, below or directly meeting the company’s risk capacity; through this tool, we are able to effectively measure risk for every action and process carried out in the business.

During this procedure, we first we need to answer the questions of when, how and where a new process should be implemented. Additionally, our measurement tool must be applied in order to ensure a stratagem is successful in achieving the goal it set out to accomplish by looking at various factors, such as risk tolerance and risk appetite.

As part of the evaluation, each risk is assigned a particular level: these levels are low, medium low, medium high, high and very high. Risks placed in the top three highest risk categories are prioritised in terms of risk mitigation. When a mitigation plan and evaluation timeline has begun, the related working unit must perform and document a risk mitigation strategy. Once completed, Jiwasraya’s risk management and corporate planning division periodically monitors these higher risks. This ensures risks identified early in the year do not impact the company’s annual targets. Further safeguards are in place too, as risk management documentation is reviewed and updated every three months.

Service comes first
As Jiwasraya is a service company, the quality of our products and personnel are why many customers choose us for their insurance needs. The perception of the quality of our services is highly influenced by the quality of our human resources department and the information technology systems they use. Improving and maintaining the competency of employees in the field of insurance – especially life insurance – is therefore of utmost importance.

Since 2006, Jiwasraya has been using a competency-based human capital management system, which is supported by the company’s information technology systems. Very few human resources procedures at Jiwasraya are now run manually.

Strategies initiated through our human capital protocol begin with competency-based recruitment and selection, followed by a competency-based training and development programme. Once successful, a new employee will work towards achieving a certificate of expertise or a professional title. We also have in place employee exchange programmes with foreign life insurers, scholarships, and study programmes that are located both in the country and abroad, giving our employees the best possible training throughout their careers.

Particularly in regard to employees who work in marketing, Jiwasraya carries out regular training and research activities to make sure the company is optimised and ready to expand in the market. Additionally, with the increasing number of rival companies in the life insurance market, whether they are local or foreign-owned, marketing has become even more important for Jiwasraya. Creating innovative and varied products sets us apart from our competitors, which is something we are earnestly committed to, especially in the field of e-insurance. With all of these efforts combined, Jiwasraya will continue to improve and embody our corporate tagline of ‘together for life’.