Life Insurance Premium Adequacy Ratio to Claim Payments: 163%

The ratio of premium adequacy to life insurance claim payments is the lowest. The Financial Services Authority (OJK)'s September 2016 monthly report shows that the premium adequacy ratio for life insurance customer claim payments reached 163.17 percent, up 17,700 basis points compared to the beginning of the year's figure of 146 percent. However, compared to general insurance and reinsurance, it is the lowest.

Total life insurance assets in September 2016 reached Rp 385.24 trillion, a 14.6 percent increase compared to the beginning of the year's figure of Rp 336 trillion. Similarly, equity also increased by 5.3 percent to Rp 79.6 trillion from its January 2016 position.

One indicator for measuring the financial performance of an insurance company is risk-based capital (RBC). According to government regulations, the RBC that must be met by insurance companies is 120 percent. This means that if all policyholders file claims, the insurance company is able to fulfill its obligations and still has a reserve of 20 percent.