The progress of insurance in Indonesia has a connection to the national economy growth which is supported by the growth of investment sector which periodically enjoys a positive escalation during the recent few years. Meanwhile on the other hand, the growing investment climate will drive the business world requiring the life insurance protection especially for their employees.
Based on Insurance Sector Statistical Data Year 2013 issued by the Financial Services Authority (OJK) it is indicated that total life insurance companies which have the business permit to operate in Indonesia are 51 companies. The prospect of life insurance and general insurance industry business in Indonesia is relatively stable. It is supported by Indonesian economy which grows and develops from time to time. Indonesia is the fourth most populated country in the world, so the insurance industry in Indonesia especially the individual life insurance has a very big potential to be developed in the future.
The business progress of insurance industry sector has not yet indeed significantly contributed to Indonesia's economy. The revenue of premium from life insurance sector within the recent 5 years (2010-2014) is as presented in the Table 1 below:
Table 1 LIVE INSURANCE PREMIUM REVENUE YEAR 2010-2014 (IN BILLION US$) Premium Revenue 2014 2013 2012 2011 2010 Individual Insurance 3.74 1.40 1.99 1.31 1.64 Group Insurance 9.16 7.36 6.30 5.96 4.21 Total 12.90 8.78 8.29 7.27 5.85 The number of life insurance policy holders can be categorized into 2 (two) groups, i.e. individual life insurance and group life insurance or askum. The number of life insurance policy holders within 2010-2014 periods is as indicated in the table below:
Table 2 TOTAL LIFE INSURANCE POLICY HOLDERS IN 2010-2014 (IN MILLION PEOPLE) Premium Revenue 2014 2013 2012 2011 2010 Individual Insurance 15.50 13.62 10.99 8.90 9.30 Group Insurance 38.24 74.50 34.70 40.80 23.90 Total 53.74 88.12 45.69 49.70 33.20 Or graphically total life insurance policy holders in 2010-2014 can be presented as follows (Figure 1):
FIGURE 1 TOTAL LIFE INSURANCE POLICY HOLDERS IN 2010-2014 2014 2013 2012 2011 2010 Individual Insurance 15.50 13.62 10.99 8.90 9.30 Group Insurance 38.24 74.50 34.70 40.80 23.90 Total 53.74 88.12 45.69 49.70 33.20 Meanwhile total life insurance policy holders in Indonesia both individual and group insurances within 2010-2014 whose policies do not last through the contract expiry is shown in Tables 3 and 4 below:
Table 3 TOTAL LAPSED POLICIES AND POLICY REDEMPTION INDIVIDUAL LIFE INSURANCE (ASPER) POLICY IN 2010-2014 (IN MILLION PEOPLE) Policy Holder 2014 2013 2012 2011 2010 New Policy 15.50 13.62 10.99 8.90 9.30 Lapsed Policy 3.98 3.41 2.58 2.20 1.95 Policy Redemption 2.36 1.97 1.51 1.15 1.16 Total 9.16 8.24 6.90 5.75 6.19 Source: Processed life insurance association (AAJI) Table 4 TOTAL LAPSED POLICY AND POLICY REDEMPTION OF GROUP LIFE INSURANCE POLICY (ASKUM) IN 2010-2014 (IN MILLIONS) Policy Holder 2014 2013 2012 2011 2010 New Policy 38.24 74.50 34.70 40.80 23.90 Lapsed Policy 2.49 5.03 2.17 2.75 1.67 Policy Redemption 2.35 4.54 1.99 2.45 1.59 Total 33.40 64.93 30.54 35.60 20.64 Source: Processed life insurance association (AAJI) Based on information collected by the researcher, both from several insurance companies, from the Indonesian Life Insurance Association (AAIJ) and from the Financial Services Authority (OJK) of the Republic of Indonesia, not all policy holders are willing to pay the premium until the expiry of their insurance contract period.
There is an interesting phenomenon, i.e. that the preliminary research result shows a general picture on the corporate image, product quality, service, trust and loyalty of life insurance policy holders in Jakarta and its surrounding area, as shown in Table 5 below.
The picture of preliminary survey indicated that the corporate image, product quality, service, trust and loyalty are not yet taken into account by the life insurance companies in DKI Jakarta region in particular and Indonesia in general, since they are still dominated by dissatisfied and highly dissatisfied factors reaching an average rate of 65%. Meanwhile the life insurance policies not covering the contract expiry within 2010-2014 periods are 19.19% in Year 2010; 17.20% in 2011; 18.08% in 2012; 18.08%, 17.47% in 2013; 20.66% in 2014.
Based on the phenomenon from the preliminary survey and the so many insurance policies not covering the contract expiry period, the researcher wished to conduct a deeper and thorough research on the influence of corporate image, product quality, service, trust and loyalty of the life insurance policy holders in Indonesia. The objective was to generate a review on the image of life insurance companies towards customers' trust.
Based on identification, formulation, objective of research as well as frame of reference, the research method applied was random sampling, with the standard control was the policy holders who have minimum coverage rate of US$ 1.00. The research was conducted in DKI Jakarta region, Indonesia which came from 5 (five) insurance companies considered as the representatives of big, medium and small scales insurance companies in Indonesia.
This research data processing applied the Structural Equation Modeling (SEM). The use of SEM as an analysis tool was based on two key reasons as follows:
SEM was able to test a complex and complicated research model partially and...