AAJI Reveals Insurance Agents Are Still Effective In Increasing Penetration In The Community

Executive Director of the Indonesian Life Insurance Association (AAJI) Togar Pasaribu (second from the left). (Photo: Aris Nurjani/VOI)

JAKARTA - Executive Director of the Indonesian Life Insurance Association (AAJI) Togar Pasaribu assessed that insurance agents are projected to be still the spearhead in increasing penetration of life insurance.

This is because insurance agents often meet face to face with the public.

"So sales through digital in our opinion may not be effective. It's not that I said it doesn't exist yet, it already exists, but it's not effective. It's more effective to use agents or bancassurance, but if it's operational and so on, it's all digital. That's really efficient," said Togar after the 2024 Indonesian Million Dollar Round Table (MDRT) press conference, Monday, June 10.

Togar said that the insurance world in Indonesia is currently experiencing major changes to digitalization which is increasingly expanding into various aspects.

Therefore, the function of the insurance industry is now two parts, namely back office and front office.

According to Togar, the back office is more focused on operations and administration, while the front office is tasked with selling insurance products, most of which are done through today's digital platforms.

Meanwhile, for operational and administrative aspects, he continued, digitalization has gone well to provide significant efficiency.

He said public awareness about the importance of insurance in Indonesia is still low, although there are more than 50 life insurance companies and more than 500 thousand insurance agents.

In addition, Togar assessed, one of the main reasons why insurance sales through digital have not been effective is due to low public awareness about the importance of insurance.

"Why is sales insurance decreasing? Because people's (insurement awareness) is still low. Then they are told to sell digital, they don't work. They have to be like this, face to face. So they have to use agents," he explained.

Over time, he hopes, the public will increasingly understand the importance of insurance.

According to him, currently the insurance industry is more focused on improving agent quality.

"We are not targeting. What we are now seeing is how to improve the quality of this agent. And the rules of the game, the transfer of agents from a company to another company. Well, we are even pushing for more people to become marketers in insurance," he explained.

Previously, based on data from the Financial Services Authority (OJK) and the ASEAN Insurance Surveillance Report 2022, insurance penetration in Indonesia was still at the level of 2.7 percent, lower than Singapore (12.5 percent), Malaysia (3.8 percent), Thailand (4.6 percent). The OJK has issued OJK Regulation (POJK) Number 8 of 2024 concerning Insurance Products and Insurance Product Marketing Channels.

In the OJK, there are additional arrangements regarding the implementation of insurance products digitally, including the fulfillment of provisions for companies to have a list of electronic system providers, owning and implementing information technology risk management procedures as well as arrangements regarding the company's cooperation in providing insurance products digitally with other parties.