Aviva Indonesia is introducing an International Indonsian Health Insurance product offering to the Indonesian market in response to a growing number of expats and well heeled local Indonesians.
The portfolio offers international health insurance coverage with limits between US$1-2 million, depending on the product, and will allow holders of a policy to travel internationally in order to receive qualifying medical treatment.
According to Aviva Indonesia’s vice president, Albert Wanandi, the products are targeted squarely at the wealthy Indonesian and expatriate market, with premiums starting at around US$ 1,360 per annum.
Aviva Indonesia hopes that strong demand and a relatively untapped market will enable it to boost its premium income by 30% this year, up from Rp 811 million (US$85,966) last year.
“The market has high potential because Indonesians travelling abroad will need Indonesian health insurance. Illness and sickness can strike at any moment. Today, a large number of Indonesians are going abroad purely for purposes of medical treatment.” remarked Mr. Wanadi.
Aviva will use its existing partnership with DBS in Indonesia to distribute and sell the product, alongside its other insurance offerings, such as Life and Pension plans. DBS claims to have approximately 20,000 high end clients in its current network, providing easy access to an appropriate market segment for the new Aviva offering.
Steffan Ridwan, Head of DBS Consumer Banking, said that he expects the partnership to generate approximately Rp100 billion (USD10.6 million) this year, of which 20% will be from the International Health Insurance product.
The bancassurance model is clearly working for this partnership, as Aviva and DBS have agreed to extend their partnership until 2015, and are looking to expand into more markets such as China, India and Taiwan. “Aviva’s research has found that consumers are worried about their financial situation in the current economic volatility. DBS and Aviva’s continued partnership will ensure that consumers have a range of quality insurance products to meet their evolving needs,” says Shaun Meadows, CEO of Aviva in Singapore and Hong Kong.
John McFarlane, recently appointed chairman of Aviva Plc, recently announcement that they were pulling out of some non-core markets, including South Korea and Malaysia, so that they could focus on segments with “unusually high return on growth”, such as life insurance units in Poland, Singapore and Turkey.
Aviva is currently selling off its Malaysian operations, and have shortlisted four bidders; Prudential Plc, Manulife, AIA Group Ltd and Sun Life Financial Inc for Aviva’s 49% stake in their joint venture with Malaysian lender, CIMB Group. The deal is valued at around US$500 million. Aviva and CIMB have struggled to make their partnership work, amid competition from Great Eastern and Prudential.
Other players in the market are also looking into bancassurance distribution channels, with Bank Danamon Indonesia having partnered with Manulife Indonesia to sell its life insurance and pension products through its network of 3100 branches and sales locations. Manulife has also packaged its life insurance with two of Danamon’s investment products, providing customers with life insurance and a variety of investment options. More than 300 Manulife personnel will be assigned to Danamon branch offices to market the products.
Some analysts estimate between 45 and 50 percent of new premium sales in Asia come from bancassurance channels, but there is room for improvement with historical rates in France and Spain having been as high as 80% at some points.