36 Chapter IV Results and Discussion The author conducted data collection by distributing surveys in the form of questionnaires from 6 to 8 May 2023. The author's goal was to obtain fast, high- quality respondents and reliable data by utilizing the consumer insights platform known as Populix. This platform employs a multi-step verification process to ensure the authenticity of respondents. It also goes beyond basic demographic screening and employing advanced screening techniques. Additionally, Populix utilizes an automatic panel scoring system to identify qualified respondents. The selection of respondents is based on the Author's advanced screening of the respondent pool. The Author targeted 2 (two) groups of respondents, namely Millennials and Generation Z, with the aim of gathering 150 respondents from each group. This approach was adopted to eliminate research result biases and processed by using Microsoft Excel and SPSS 20 software application. IV.1 Analysis The discussion of analysis divided into 4 (four) sections to answer research questions: 1. External analysis using PESTEL tool, Porter 5 Forces, descriptive analysis and statistical analysis using SPSS 20 software of Millennial and Generation Z as untapped target market; and 2. Internal analysis using Resource-Based View, VRIO and SWOT. Research Question 1: What is the current business condition of PT DELI, a company operating in the life insurance industry, if seen from internal and external factors to influence its competitive position. IV.1.1 External Analysis IV.1.1.2 General Environment Analysis using PESTEL Tool Based on Thompson et al. (2012) PESTEL or PESTLE is a strategic framework used to analyse the macro-environmental factors that can impact an organization or industry. It provides a comprehensive assessment of various external factors that 37 may influence business operations, decision-making, and long-term planning. The following is PESTEL analysis for digital insurance industry in Indonesia: Political Factors Indonesian government has issued Government Regulation No. 3 of 2020 (“New GR”) amending Government Regulation No. 14 of 2018 on Foreign Ownership in Insurance Companies, which came into effect on 20 January 2020. Changes under the New GR include changes to the limit on foreign ownership of shares in (i) insurance/reinsurance companies (both conventional and sharia), insurance/reinsurance brokers and insurance loss assessment companies and (ii) sharia insurance/ reinsurance companies from spin-offs of sharia business units. "With the relaxation of foreign ownership regulations for insurance companies by the government, it would be advantageous for DELI, considering that the majority of its shareholders are foreign entities holding over 90% of the shares. In the case of a non-listed insurance company with over 80% foreign ownership, it can only increase its paid-up capital if the post-increase foreign ownership percentage does not exceed the current foreign ownership percentage. For example, if a non-listed insurance company has 90% foreign ownership, it can raise capital only if at least 10% of the increased capital is subscribed to by Indonesian citizens or Indonesian legal entities, maintaining the 90% foreign ownership. Otherwise, if there are no subscriptions from Indonesian citizens or entities to meet the required limit, the New GR (Government Regulation) mandates the insurance company to raise capital through an Initial Public Offering (IPO). The government's initiatives to foster the growth of the digital economy and fintech sector can contribute to the development of the digital insurance industry. This aligns with Indonesia's Digital Finance Road Map, as depicted in Figure IV.1, issued by the OJK. Collaboration plays a key role not only between traditional financial institutions and new fintech providers but also with emerging fintech players, focusing on expanding outreach to new sectors, enhancing access to 38 agricultural finance and value chain payments, and facilitating access to insurance, healthcare, education, and other industries. Figure IV.1 Vision of Indonesia’s Digital Finance Road Map (Source: Otoritas Jasa Keuangan, 2020) Economic Factors Indonesia, as one of the G20 member countries, possesses a substantial Gross Domestic Product (GDP) amounting to IDR 16,970.8 trillion in 2020. However, when it comes to the development of the life insurance industry, Indonesia lags behind its counterparts in Southeast Asia, experiencing a slower pace of growth. This situation is primarily attributed to the relatively low and stagnant levels of density, penetration rate, and financial literacy within the life insurance sector in the country. As shown in Figure IV.2, based on AAJI and BPS the penetration rate of the life insurance industry in Indonesia has exhibited a stagnant trend over the past 25 years, fluctuating from 0.49% to 1.42%. On average, the industry has experienced an annual penetration rate of 0.95% during this period. This implies that, on average, the life insurance sector has contributed 0.95% to the country's GDP each year over 39 the past 25 years. Another measure used to assess the competitiveness of the life insurance industry is density, which gauges the average premium expenditure incurred by individuals within a particular region. From 1996 to 2021, the density of the Indonesian life insurance industry ranged from Rp 14,262 to Rp 740,943. This means that on average in the last 25 years, one Indonesian only spend Rp 307.103 for premium payment in order to obtain protection service provided through life insurance products. This figure suggests that the life insurance sector's impact on the economy is relatively modest, further emphasizing the sluggish progress. Figure IV.2 Penetration Rate and Density of the Indonesia Life Insurance Industry (Source: Asosiasi Asuransi Jiwa Indonesia and Badan Pusat Statistik, 2022) Apart from that, the implementation of the ASEAN Economic Community, combined with the Regional Comprehensive Economic Partnership (RCEP) which became effective in January 2022, will strengthen trade relationships between ASEAN countries and major economies like Mainland China, Japan, South Korea, and Australia. This development is expected to have a notable impact on the growth of life insurance premiums. The regional integration of markets will create favourable conditions for increased investment in the Indonesian life insurance sector, potentially attracting more participation from global insurance players. 40 The ASEAN Economic Community and RCEP foster closer economic cooperation, facilitating the flow of goods, services, and investments among member countries. This deeper regional integration enhances trade opportunities and promotes cross- border collaboration. As a result, life insurance companies operating in Indonesia can benefit from increased trade ties and expanded market access to economies within the ASEAN region and the RCEP partnership. Sociocultural Factors Figure IV.3 Mass Market Priorities Management (Source: DELI and Nielsen Company Internal Research, 2021) The social norms and cultural factors influencing insurance decisions especially related to the perception and lack of education towards protection against others, concern of “losing money for nothing” and highly valued collectivism which leads to financial dependency to family/social circle are the key factor that makes protection is seen least important. Research conduct by DELI and The Nielsen Company regarding mass market financial product priorities management as shown in Figure IV.3 shows that insurance is seen as potential industry to be developed. Through large population of mass market in Indonesia and COVID-19 pandemic situation, potential of insurance growth is huge. However, it become a challenge to grow insurance industry due to lack of awareness of protection and financial literacy. It leads perception of insurance as investment to not “losing money” from instant tangible value from it, yet not knowing the basic understanding. Moreover, BASIC NEEDS SAFETY NEEDS WEALTH INCREMENT PROTECTION Short-term saving Emergency fund “Live by today” Investment Prioritizing whatever family’s needs by today, though might consume almost 100% of their income Treated as safety net to provide flexibility to be used whenever needed àshort-term peace of mind Awareness towards investment is seen improved, yet only skewed amongst financially literate segment àwhich usually upper class to affluent market Selain mikirkebutuhan, dia juga harus memikirkan jaminan hidupnya. Jadi lebih seimbang sedikit. Makanya ini celah pemain asuransi maininsavingplan lewat unit linkbuat masyarakat yang condong ke tabungan -Media“ Alokasi untuk investasi itu mulai tinggi ya.