Restu Pranandari
IPMI International Business School
Amelia Naim Indrajaya
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Only 5 percent of the Indonesian population is protected by individual life insurance. Prudential Indonesia is trying to decrease the protection gap by providing education to the people of Indonesia, particularly to those who are low-income and illiterate, on how to manage their finances and plan their future to achieve better lives. In several places all over Indonesia, Prudential Indonesia provides Financial Literacy education to women as part of their belief that women play huge part in planning a family’s finances.
The Indonesian economy has continued to grow over the last few years, with the potential to change lives and improve the livelihoods of millions of its citizens. Despite the seemingly rapid growth of Indonesia’s financial services sector, there is a tremendous information gap on how individuals and families can prepare for and protect their financial futures.
A study launched by the Boston Consulting Group in 2013 estimated that Indonesia’s middle and affluent classes will rapidly expand from 74 million people in 2012 to an estimated 141 million by 2020. However, today Indonesia ranks far behind other countries in the region with less than 5 percent of the total population protected by individual life insurance and a premium to GDP ratio of just 1.6 percent, low in comparison to other countries in the region. In fact, the nation’s insurance market is not yet maturing; it requires significant growth and investment to reach the level of the insurance premium to GDP ratio in countries like Malaysia (3.2 percent), Thailand (3.8 percent), India (3.1 percent) and Hong Kong (11.7 percent).
Insurance could be an important foundation to support Indonesia’s economic growth, because it provides long-term financial protection for Indonesian familie. With such a huge protection gap, Prudential Indonesia believes that this Financial Literacy education is a contribution to enhance public awareness on the importance of financial planning.
The activity will improve Indonesian people's lifestyles and ensure a conducive market environment. With the awareness of financial planning, it is expected that people will also become aware of the importance of life insurance for their long-term financial protection, which will eventually reduce the protection gap and increase the market for life insurance.
Financial Literacy for Women is supported by the Indonesia Ministry of Women Empowerment, Ministry of Tourism and Creative Economy, and Ministry of Trade. The target group of this activity is the low-income female entrepreneurs who work in the informal sectors. This group has income ranging from IDR 500,000 to IDR 2,500,000 or equivalent of USD $50 to USD $250.
The program provides tips for managing funds for women so they can manage their family income and become more independent, embracing their important role in improving the quality of their family lives. The programs are held in the multifunction halls nearby the communities' locations.
In the program, Prudential Indonesia provides a pocket book about the tips of managing funds, interactive workshop, sharing and games. This program is very unique because all materials and training sessions are presented by women volunteers who were the Prudential Indonesia’s employees. The materials were also created by Prudential Indonesia.
Since 2009 to 2015, this event has been implemented in 19 cities all over the countries which includes Bogor, Bandung, Cirebon, Tasikmalaya, Solo, Yogyakarta, Semarang, Surabaya, DKI Jakarta, Banda Aceh, Medan, Palembang, Batam, Banjarmasin, Denpasar, Mataram, Kupang, Makassar, and Manado.
Since 2009 to 2015, this program has reached 20,362 women from 19 cities all over Indonesia in 79 sessions. In 2014 alone, Prudential Indonesia reached 7,001 participants in a year.
In 2014, Prudential Indonesia recorded a solid business performance with total premium income growth of almost triple that of the industry’s 6.8 %. The strong growth reinforces Prudential Indonesia’s position as the leader in the country’s life insurance industry and underlines Prudential Indonesia's commitment to provide long-term protection for the Indonesian people.
Prudential Indonesia is growing significantly since this activity started in 2009. Total premium income more than tripled from Rp 7.5 trillion in 2009 (more than a half billion U.S. dollars) to Rp 26.18 trillion in 2014 (just under USD $2 billion), and saw total asset increased from Rp 17.5 trillion (USD $1.3 billion) in 2009 to Rp 56.47 trillion (USD $4.3 billion) in 2014. Prudential Indonesia also maintained its commitment to providing protection to its more than 2.45 million customers in 2014. This is demonstrated by the total claims and benefits paid of more than Rp 9.44 trillion (USD $720 million) in 2014, a significant increase from Rp 476 billion (USD $36 million) in 2009.
Low income women are now equipped with financial planning skills, which will then be spread across their community. Their families will have better education, better quality of life and eventually will have a better educated new generation for better Indonesia.
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Melina Karamoy, Senior Manager - Corporate Social Responsibility
