PRESS RELEASE: Allianz Life Indonesia Offers Islamic Microinsurance On Permanent Basis After Successful Pilot Phase

Original press release available here.

JAKARTA, January 31 – After an 18-month pilot, microinsurance products are now an established product line of Allianz in Indonesia. New features, such as policies compliant with Islamic law and co-insurance for spouses, as well as a new distribution concept make the products more flexible and accessible for customers.

Jens Reisch: “There is significant potential”

Since August 2006, Allianz has been offering microinsurance products in Indonesia. Following this successful pilot phase, these products are now well established. As of January 31, 2008, the microcredit insurance “Payung Keluarga” (meaning “Family Umbrella”) is now featuring extended options and will be permanently included in the product portfolio of Allianz in Indonesia.

“We are the first international insurer to offer a microinsurance product that complies with Islamic law,” says Jens Reisch, CEO of Allianz Life Indonesia. Allianz has been offering Takaful insurance products in Indonesia, which incorporate the principles of Islamic finance law, since April 2006. Now it is introducing a microinsurance version of the Takaful policies, specially tailored to meet the needs of customers with low incomes. “The majority of the Indonesian population is Muslim, so ensuring that the products they buy do not go against the principles of the Koran is an important consideration for many,” says Reisch, “and that applies to potential microinsurance customers, too.”

Another new feature of “Family Umbrella” policies is the opportunity for policyholders to co-insure their spouse. If they do, the family is insured not only in the event of the death of the loan taker – 90 percent of whom are women who have their own small businesses – but also if the spouse, often the main wage earner, should die.

Expanding the partner network

These new features have been introduced in response to feedback from the microbanks that sell Allianz microinsurance policies to their loan takers. The banks can now tailor the insurance policies to meet the needs of their clientele even better. However, to keep down administration costs and thus premiums which currently amount to about EUR 0.50 (USD 0.73), the policies for all the customers of any specific microbank are subject to the same conditions.

“We are currently collaborating with seven partners, but are confident that with our improved product offering we will be able to expand this network considerably,” continues Reisch. “Of some 56,000 microbanks in Indonesia, around 600 are large and modern enough to be viable partners. And then we have the large commercial banks, more and more of which are entering the microfinance sector, so there is significant potential.”

Aiming high

Allianz Indonesia aims to sell a total of 100,000 microinsurance policies before the end of 2008, rising to 300,000 policies by 2010. The company currently has around 42,000 policyholders. “Our initial experiences have encouraged us greatly,” explains Reisch. “We have been able to build up a sustainable customer basis and are in the black. Of course, our premium volume is low, but this is the nature of microinsurance.”

A new distribution concept is designed to make the products even more accessible for customers: microfinance service providers as well as representatives and brokers can now broker policies with microbanks. According to Reisch, “the next thing we want to do is expand our product portfolio. Health insurance and their children’s education are important considerations for low-income families, so these will be our next steps. In addition, we are considering offering property insurance policies which, for example, protect against the risk of natural disasters.”

Planned expansion in other countries

The Allianz Group is also offering microinsurance products in further countries, such as India and Egypt. In India, Bajaj Allianz has already concluded 250,000 contracts. Currently, Allianz has some 30,000 microinsurance customers in Egypt.

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