Stable Outlook - Indonesia's life and non-life insurance market is well-expanded and strengthened by solid capitalization, supporting a stable outlook assigned to the segment. The gross premium created (GPW) for credit insurance, the market's third-largest business line, increased by 86.2% to IDR 5.7 billion in 2020.
Property insurance - the biggest business segment, also posted solid GPW growth of 9.7% to IDR 20.9 trillion. However, motor insurance GPW recorded quiet growth of 0.3%. Improved underwriting discipline continued rate rises, lower catastrophe risks, and an improving commercial and personal auto market in the first half of 2020.
Furthermore, these factors have led to strong underwriting success in the Indonesian property and casualty insurance industry. Indonesia's insurance sector produces less than 1% of the country's gross domestic product (GDP). Its penetration and density rates are below the standard for the region.
Rooms For Growth - With gross insurance premiums at 1.99% of GDP versus 3.9% on average for Emerging Asia and insurance density to the tune of USD 82 per capita versus USD 207 for Emerging Asia, the industry has a lot of room for development. Some 152 insurance companies and 227 insurance intermediaries operating in the country, according to data from March 2022.
Life insurance - is the biggest segment, earning 40% of total gross insurance premiums in 2020. Next comes social insurance with a 39% share and non-life insurance and reinsurance with 19% of the total. Mandatory insurance accounted for 2.6% of overall premiums. Gross contributions from Sharia insurance were equivalent to 3.2% of total insurance income.
The InsurTech sector has seen much technological and investment growth over the past few years. Traditional insurance business lines, such as health, auto, and commercial, are being revolutionized by new digital-centric start-ups. New technologies, such as AI and IoT, have been re-architecting insurance data, the basis of the insurance industry.
Dispropotionate Growth - Executives have argued that the insurance sector tends to benefit disproportionately from economic expansion. If the development of the economy is 5.8-5.9%, then the insurance market should grow at 15%. Growth in the insurance market is greater than the growth of many other industries.
Overall insurance penetration in the country of 264 million people ranks among the lowest possible in the world at less than 2% (4.5 million Indonesians carry a policy). Half of Indonesia's population is under the age of 30, with the number of millennials (aged 17-35) in Indonesia presently at 79.5 million.
Balanced Growth - Outlook for the Indonesian insurance sector, both the life and non-life segments were balanced, with companies showing steady growth, strong margins, and adequate reinsurance protection. Additionally, the outlook claimed that risks in terms of assets owned were within an acceptable range and the sector was well regulated.
Industry Consolidation - The Indonesian life and non-insurance market is semi-consolidated. The market is led by some local and international players in the market. The market is economical, as the demand for life and non-life insurance highly increased post-COVID-19 pandemic due to increased awareness among people for insurance.
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