Life Insurance Updates Indonesia

The rising of Indonesian middle class has led to a stronger purchasing power, which increases the demand for goods and services. As one of the countries with the largest population in the world, Indonesia is a highly potential market for insurance products. What is actually the market appetite for insurance products in Indonesia today?

According to Liputan 6 - there is an increased awareness among Indonesians to have insurance as seen from the insurance industry performance in the second quarter this year. There is a 10% increase on the premium revenue and a 15.1% increase on the number of insured individuals. The Indonesian Life Insurance Association (Asosiasi Asuransi Jiwa Indonesia/AAJI) chairman, Hendrisman Rahim, has suggested that this number indicates that Indonesian citizens have become more aware about the importance of insurance protection to face any life uncertainties.

The commitment of insurance companies is also shown from the total paid claims in Q2 2016, which is higher than the same period last year. The medical claim, end-of-contract and death claim has increased by 27.9%, 18.2%, and 17.3%, respectively.

Compared to the other countries in ASEAN, Indonesia is still relatively behind. With the largest number of people, more than 250 millions, Indonesia should have been number one in the insurance industry. As reported by Sindonews, Indonesia is still below Singapore and Thailand.

Muliaman D Hadad, the chairman of the Financial Services Authority (Otoritas Jasa Keuangan/OJK) has said that ASEAN, with 600 millions people, is a big potential for insurance industry. Indonesia makes up 40% of this number, and has not yet catch up to Singapore and Thailand. Based on the premium revenue, in 2015, Indonesia is third (USD12.9 billion) after Singapore (USD24.4 billion) and Thailand (USD19.1 billion).

According to Hadad, the largest proportion still comes from the life insurance with its IDR378.08 trillion asset, followed by social insurance with IDR226.92 trillion asset.

The growth of the insurance industry in Indonesia cannot be separated from the insurance companies, which more assertively take steps to reach more customers. Reported in Beritasatu, Majalah Investor awarded the best insurance award of 2016 to 8 companies, including the best insurance companies for life insurance category to PT Prudential Life, PT Panin Dai-ichi Life, and PT Asuransi Jiwa Adisarana Wanaartha. Meanwhile, the best public insurance category goes to PT Asuransi Kredit Indonesia, PT Asuransi Bangun ASKRIDA, and PT Asuransi Bank Umum BCA. These accolades are expected to stimulate the growth of the insurance industry in Indonesia.