Stock-based plan dominates unit-linked life insurance products
JAKARTA. The stock-based unit-linked insurance plan, also known as stock-based unit-linked products become the most developed product within the industry.
Wawan Hendrayana, Vice President of Infovesta Utama, mentioned that in the research they conducted, the number of stock-based unit-linked products clocked up to 215 types as of 2023. Meanwhile, the number of fixed-income-based unit-linked products reached 125, followed by mixed-based unit-linked products of 123, and lastly, money-market-based unit-linked products of 73.
Hendrayana said that the number of unit-linked products have faced a decline within the past 5 years. This decrease occurred right after the issuance of Circulating Letter of Financial Services Authority (OJK) No.5/SEOJK.05/2022 regarding Unit-linked Insurance Plan (SEOJK PAYDI). This regulation changes the course of investment, placement, and marketing strategies of unit-linked insurance products. “[The number] of unit-linked products of all investment have shrunk [in the past 5 years],” he added during Unitlink Award 2024 quoted last week (1/3).
Hendrayana mentioned that within the past five years, the number of mixed-based unit-linked products has dropped 10.22%. Meanwhile, money-market-based unit-linked products fell 7.59%, while fixed-income-based unit-linked products saw 8.76% decline in number.
Stock-based unit-linked products, cumulatively, has grown 9.69% in the past 5 years. However, if we are observing the data from the issuance of SEOJK PAYDI in 2022, the number of products has gone down from 235 to 215, dropping 9.3%.
Hendrayana mentioned that this decline occurred as an impact of the regulation issued by OJK, in which mutual fund management could only be authorised to investment manager based on Government Securities (lit. Surat Berharga Negara/SBN). Stock investment is also authorised only through investment manager within a Fund Management Contract, while the stock itself must be managed internally.
This policy change affects investment trend, with insurance companies’ assets tend to be stagnant. Hendrayana reassured that the allocation of the assets is mostly security-based, especially SBN. This significant modification reflects a shift in investment strategy in life insurance industry.
In total, in 2023, life insurance industry’s assets clocked up to IDR 614.61 trillion, up 0.7% year-on-year (yoy) from IDR 610.38 trillion. Then, the total investment funds were IDR 541.17 trillion, also increasing 0.8% yoy from IDR 537.1 trillion in 2022. (PP/ZH)
