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As the first western joint venture insurer,
Allianz Indonesia is introducing insurance products which comply with
the rules of the Islamic law, Sharia. Allianz.com News spoke to Jens
Reisch, CEO of PT Asuransi Allianz Life, about growth prospects,
distribution strategies and the new branch office in Banda Aceh.
Allianz.com News: Why is Allianz offering Sharia insurance products?
Jens Reisch: We just listened to our
customers who increasingly asked for it! They are attracted by the
community principle that Islamic financial products represent. This is
why Sharia-compliant financial products have tremendous growth rates in
Asia and other parts of the world. The general market share of Sharia
insurance is still below one percent but it grew by 28 percent in 2005.
We expect Sharia-compliant insurance to have a market share of 20
percent in 20 years, like today in Malaysia.
So how many policies will you sell?
Reisch: In this first year, we aim to
sell at least 1,000 Sharia policies and achieve a premium income of
over five billion Indonesia rupiahs or about 500,000 US dollars. Five
years from now, we expect ten percent of our new life insurance
business to be Sharia products.
Indonesia is the largest
Muslim country in the world with an insurance penetration of less than
three percent – that means a huge growth potential. We think that about
15 million people, out of some 230 million Indonesians, will soon be
able to afford insurance.
When will your Sharia insurance be profitable?
Reisch: It always takes a few years
for life insurance products to become profitable, but we expect to get
there between year four and five. We have reinsurance to cover major
claims.
Why should somebody prefer Allianz to its competitors?
Reisch: Our modern product is backed
by the international brand name, first-class service and the financial
security of the Allianz Group. We are the only international insurer in
Indonesia who sells all kinds of insurance – property and casualty,
life and health insurance – with one brand. Now we also offer both
conventional and Sharia products.
 Jens Reisch, CEO of PT Asuransi Allianz Life
Where will you invest the funds?
Reisch: Our life products are
unit-linked, and we will invest in funds accepted by the Board of
Sharia. Indonesian banks offer a wide variety of them, including cash,
fixed-income and balanced funds. By law, we are required to invest more
than 80 percent in Indonesia itself.
The Sharia insurance unit is largely managed by women. Is that common in Indonesia?
Reisch: Ten years ago, when I first
came to this country, it was very rare. Today, this has changed very
much – in fact, the whole economy changed after the Asian crisis, and
many young women have seized their opportunities. Today, we have two
female board members, and around 50 percent of the upper management are
women.
 Sharia Insurance Will your sales agents offer Sharia along with conventional insurance, and how will they be prepared?
Reisch: Since we are mainly focusing
on people who are open for both types of insurance, and since the
regulation allows it, our agents and other business partners will offer
both conventional and Sharia insurance. About half of our 6,000 sales
agents are Muslims, but also non-Muslims are allowed to sell Sharia
insurance. They just have to complete a three-day training after which
they receive an internal license.
How about other distribution channels?
Reisch: We see great potential,
especially in bancassurance as Islamic banking has considerably grown
in recent years. We already have an agreement with the Muamalat
Indonesia Bank to sell credit life insurance, to go along with
Sharia-conform loans.
Will your branch in Aceh focus just on Sharia products? Do you see big potential here?
Reisch: We will offer all our
products anywhere in Indonesia, also in Aceh. We expect to sell many
Islamic products there as almost everyone is Muslim.
Just a
few years ago, it was impossible to get insurance or reinsurance for
Aceh because of the civil war. The tsunami shock has made peace
possible. We're the second foreign insurer to open a branch in Banda
Aceh, and are committed to the region in other ways as well: We helped
build a new school in Tibang, and are supporting much-needed
microfinance projects.
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