Indonesia Life Insurance Projected Growth 2028

The life insurance sector in Indonesia is on a trajectory to achieve a valuation of $12 billion in gross written premiums (GWP) by the year 2028. This growth is forecasted at a compound annual growth rate (CAGR) of 3.8% from the year 2024, escalating from IDR161.3 trillion (US$10.5 billion) to IDR187.2 trillion (US$12.1 billion) within a four-year span.

This optimistic outlook emerges despite a preceding phase of slowed growth, highlighted by a downturn in the sales of endowment insurance policies, expected to dominate life insurance premiums by nearly 70% in 2024.

Indonesian life insurance market forecasts - Industry trends suggested a looming 2.0% shrinkage in the industry in 2024, following a 5.4% reduction in 2023. Factors contributing to this trend include a downturn in investment-linked insurance product sales amid global financial uncertainties and a shift in consumer preference, impacting new premium acquisitions.

Nonetheless, a resurgence is anticipated in 2025, fuelled by a rising demand for traditional life insurance offerings and evolving demographic dynamics in Indonesia.

Indonesian endowment insurance market forecasts - Endowment insurance, claiming a substantial 69.3% of the GWP in 2024, is foreseen to witness a 7.0% decrease in the same year, subsequent to a 10.9% fall in 2023.

These contractions are largely attributed to enduring market volatilities, deterring long-term returns and swaying consumer interest towards more traditional insurance plans focused on long-term security and protection.

In a bid to counteract these trends, regulatory enhancements initiated by the Financial Services Authority of Indonesia (OJK) in January, aimed at reinforcing investment-linked insurance product marketing, are expected to cultivate consumer trust and favorably impact endowment insurance growth, with a projected CAGR of 1% through 2024 to 2028.

Indonesian PA&H insurance market forecasts - Additionally, the personal accident and health (PA&H) insurance category, positioned as the industry's second-largest segment and representing 13.8% of the GWP in 2024, is poised for a 13.1% expansion in the same year.

The segment's growth is bolstered by an uptick in health awareness, escalating medical expenses, and demographic shifts, including an aging population and extended life expectancy projections. The PA&H insurance segment is projected to exhibit a CAGR of 10.8% between 2024 and 2028.

Indonesian term life insurance market forecasts - Term life insurance, accounting for an estimated 12.9% share of Indonesia's life insurance GWP in 2024, is slated for a 9.8% growth due to demographic changes and an increase in consumer disposable income.

Innovations by insurers, including the introduction of cost-effective term insurance plans, are anticipated to further stimulate term life insurance growth, with an expected CAGR of 7.9% from 2024 to 2028.

57% Policy Lapsed - AIA Vietnam

The Department of Insurance Management and Supervision (Ministry of Finance) has just announced the conclusion of the inspection of insurance sales through banks (bancassurance) at AIA Vietnam Life Insurance Company in 2022.

High Policy Lapsation - Almost 57% of AIA insurance sold through banks were canceled after the first year. Some employees were not eligible but still sold insurance. AIA distributes insurance through 6 banks including VPBank, BVBank, KienlongBank, CitiBank, HSBC, PVBank. Among them, the insurance distribution partner with the highest new revenue is VPBank. By the end of 2022, AIA has paid the initial support amount to its largest partner, VPBank, of more than 7.200 billion.

In 2022, AIA's insurance premium revenue sold through banks will reach nearly VND 5.300 billion, accounting for 28% of total premium revenue. If calculated based on the sale of new contracts, the banking channel contributes 42% of AIA's total new operating fees.

Accordingly, the company issued more than 73.400 new contracts through banking channels. Cancellation rate after the first year is 57%, calculated based on insurance premium.

In addition to AIA, the abandonment rate of insurance contracts sold through banks after the first year, according to previous inspections by the Ministry of Finance, at other businesses is also high, from 32% to 73% (2021).

No License To Sell - At AIA's banking insurance distribution partner, VPBank, there are 167 employees of this bank introducing customers to participate in more than 230 universal life insurance contracts even though they have not yet been granted an agent training certificate, or have not yet received an agent training certificate. Certificate of completion of course on universal life insurance products.

In addition, the inspection showed that more than 3.000 bank employees of VPBank, BVBank, KienLongBank... were trained by AIA company to introduce customers to unit-linked insurance but did not ensure full content. , training duration according to regulations of the Ministry of Finance. Accordingly, these bank employees only introduce customers and do not participate in consulting, offering, or arranging contracts.

Allowing employees of insurance agents who have not been fully trained to approach customers and have not completed all the steps agreed upon between AIA and the bank, but still receive full commissions and bonuses, according to the results. inspection, is not in accordance with regulations.

Payment Not In Accordance With Law - In addition, in 2022, AIA will spend more than 376 billion to pay "fixed allowances" and bonuses to personal insurance agents in the bancassurance channel, however, the Ministry of Finance determines how to determine and calculate the bonus payment amount. not in accordance with the law.

Accordingly, the Insurance Supervision Administration requested the general director of AIA Vietnam to review and strengthen the management of insurance sales activities through banks to reduce contract cancellations and ensure the interests of buyers. The promulgation of bancassurance regulations must ensure that customers are advised in accordance with their needs and financial situation, clearly aware of benefits, fees, as well as risks.

In fact, after the "boom" period, cross-selling of insurance through banks has also recorded a stricter, healthier shift. Some insurance units have asked their banking partners to commit to the contract maintenance rate, but most units have not made this number public.

The main violations of insurance enterprises are mainly related to the promulgation of regulations and improper supervision of insurance agents; improper management and use of insurance agents; Accounting and bookkeeping are still negligent.

Transforming Distribution of Insurance

In the age of smartphones and instant access to information, it’s no surprise that even the most traditional industries are undergoing a digital makeover. The insurance sector, once synonymous with stacks of paperwork and lengthy meetings with agents to get quotes, is no different.

Digital Transformation - Today, InsurTech, an emerging category in the connected economy, is spearheading this digital transformation, with startups leveraging advanced tools and technologies — from artificial intelligence (AI) to big data analytics — to transform how individuals choose and purchase insurance.

The proportion of consumers shopping online for insurance surged from 22% to 27% between 2022 and 2023, while those turning to agents dropped from 42% to 35% over the same period. The study further reveals a notable trend among younger consumers, who are turning to online communication channels when assessing life insurance options.

Younger individuals are more likely to have auto and health insurance, over 60% of Gen Z and millennial consumers plan to purchase one or more insurance types within the next 12 months, with nearly half eyeing life insurance specifically.

Simplification Is Key - One significant way digital platforms are transforming the life insurance landscape is through the simplification of the purchasing process. Websites and mobile apps offer intuitive interfaces that guide users through the process, eliminating the need for complex forms and confusing terminology.

Moreover, with just a few clicks or taps on their smartphones or computers, consumers can compare quotes from multiple insurance providers, assess different policy options, and make informed decisions about their coverage.

By inputting basic information such as age, health status, and desired coverage amount, users can receive tailored insurance options in seconds, enabling them to make informed choices without the need for extensive research or consultation.

Enabling Agent - InsurTech firms are also transforming the sector with platforms tailored for life insurance agents, enabling agents and their clients to access near-instant quotes, compare, and apply for life insurance and long-term care insurance across multiple major carriers.

Prioritizing agents’ convenience underscores the industry’s recognition of the crucial role plays in the insurance process. In fact, despite their preference for online convenience, Gen Z and millennial consumers continue to place significant value on the agent, even as they conduct their research and gather information online.

Specifically, nearly half of each demographic value the expertise provided by financial experts when making their ultimate insurance purchase decisions. This preference is rooted in a widespread lack of confidence among young consumers regarding their understanding of insurance products.

In conclusion, digital platforms are reshaping the life insurance industry by streamlining the purchasing process for consumers, while simultaneously equipping agents with advanced tools and technologies. This convergence of technological innovation and professional expertise is positioning the sector to better meet the evolving needs of today’s connected consumer.

Malaysia - General Insurance 2023 Updated

The general insurance industry saw a 7.8 per cent rise in gross written premiums, reaching RM21.4 billion in 2023 compared to the previous year.

Motor & Fire - Motor and fire lines of business remained the leading premium contributors, with motor maintaining its position as the largest line of business, commanding a 45 per cent share of the total premium.

Despite the upward trend in gross written premiums, the underwriting profit contracted by 26 per cent to RM1.16 billion. This decline is largely due to a contraction in profitability for motor and fire lines of business. Motor insurance experienced an underwriting loss of RM156 million with net claims incurred ratio of 66.7 per cent, returning to pre-pandemic levels. Inflationary cost pressures on vehicle spare parts and a rise in road accident rates are challenges facing this line of business.

Fire Insurance - The fire line of business, accounting for a 21 per cent share of total premiums, recorded an eight per cent increase in premiums in 2023, totaling RM4.4 billion compared to 2022. The decline in underwriting profit due to increasingly volatile weather events, including various flood events in 2023, coupled with rising reinsurance costs which will continue to exert pressure on underwriting margins.

General Insurance Industry - The statement said the overall general insurance industry settled an average of RM21 million daily on total insurance claims in 2023, an 11 per cent increase year-on-year.

Over the past decade between 2014 and 2023, the payout for motor claims averaged RM13.4 million per day and constituted 72 per cent of the total payout. In 2023, payout for motor claims rose to RM15.1 million per day, the highest payout in the recent five years.

Hanwha Life - Earn Dividends - Vietnam

Hanwha Life Insurance Co. is set to earn dividends from its Vietnamese subsidiary, reporting a cumulative profit after 15 years, becoming South Korea’s first insurer to collect such a return from its overseas units.

Hanwha Life’s wholly owned unit in Vietnam decided on cash dividends of 100 billion Vietnamese dong ($4 million) at an employees’ general meeting last week. It was the first time for a South Korean insurer to collect dividends from overseas subsidiaries, excluding those of equity investments. South Korean life insurers Samsung Life Insurance and Mirae Asset Life Insurance have overseas units in Thailand and Vietnam, respectively, that have posted profits. But they have yet to collect dividends from those subsidiaries.

Hanwha Life’s Vietnamese subsidiary achieved cumulative profit after 15 years in 2023, marking the first overseas unit of a South Korean insurer to record such a surplus. The subsidiary logged a net profit of 47.1 billion won ($34.1 million) last year, about six times the 8 billion won in 2021.

Few South Korean financial companies such as banks and securities have earned dividends from their Vietnamese subsidiaries due to the Southeast Asian country’s tough regulations. Most South Korean financial firms have accumulated profits from their subsidiaries in the nation only as retention or for re-investments.

Hanwha Growth In Vietnam - Korean insurers have been increasingly expanding their overseas businesses as the local market has become saturated due to the country's aging population and record-low fertility rate.

The subsidiary, the first overseas unit of South Korean insurers, became one of the top 10 life insurers with assets of 981.6 billion won last year. Its premium income surged to 210.5 billion won last year, about 100 times the 23 billion won in 2009, its first business year.

The unit, which had only two offices in Ho Chi Minh and one in Hanoi in 2009, now operates 119 branches in major cities. Hanwha Life aims to expand its business further in the Southeast Asian country, given its strong growth potential.

Hanwha Life’s Vietnamese unit has been focusing on localization for the market to expand the business. The subsidiary has only three employees from its headquarters in Seoul, while all other staff are locals who better understand the domestic financial environment.

Insurance Liabilities - Baltimore Bridge

The owner and manager of a cargo ship that rammed into Baltimore’s Francis Scott Key Bridge before the span collapsed last week filed a court petition Monday seeking to limit their legal liability for the deadly disaster.

The companies’ “limitation of liability” petition for cases litigated under U.S. maritime law. A federal court in Maryland ultimately decides who is responsible — and how much they owe — for what could become one of the costliest catastrophes of its kind.

Singapore-based Grace Ocean Private Ltd. owns the Dali, the vessel that lost power before it slammed into the bridge early last Tuesday. Synergy Marine Pte Ltd., also based in Singapore, is the ship’s manager.

Cap Liability - Their joint filling seeks to cap the companies’ liability at roughly $43.6 million. It estimates that the vessel itself is valued at up to $90 million and was owed over $1.1 million in income from freight. The estimate also deducts two major expenses: at least $28 million in repair costs and at least $19.5 million in salvage costs.

The companies filed under a pre-Civil War provision of an 1851 maritime law that allows them to seek to limit their liability to the value of the vessel’s remains after a casualty. It’s a mechanism that has been employed as a defense in many of the most notable maritime disasters, said James Mercante, a New York City-based attorney with over 30 years of experience in maritime law.

Casualties & Losses - Eight people were working on the highway bridge — a 1.6-mile (2.6-kilometer) span over the Patapsco River — when it collapsed. Two were rescued. The bodies of two more were recovered. Four remain missing and are presumed dead.

The wreckage closed the Port of Baltimore, a major shipping port, potentially costing the area’s economy hundreds of millions of dollars in lost labor income alone over the next month.

Experts estimated cost to rebuild the collapsed bridge could be at least $400 million or as much as twice that, though much will depend on the new design.

The amount of money families can generally be awarded for wrongful death claims in maritime law cases is subject to several factors, including how much money the person would have likely provided in financial support to their family if they had not died.

Air-Ambulance Medical Claim Denied

Sara England was putting together Ghostbusters costumes for Halloween when she noticed her baby wasn't doing well. Her 3-month-old son, Amari Vaca, had undergone open-heart surgery two months before, so she called his cardiologist, who recommended getting him checked out. 

At Natividad Medical Center in Salinas, California, doctors could see Amari was struggling to breathe and told her that he needed specialized care immediately, from whichever of two major hospitals in the region had an opening first. Amari was declining rapidly, his mother said. Doctors put a tube down his throat and used a bag to manually push air into his lungs for over an hour to keep his oxygen levels up until he was stable enough to switch to a ventilator.

According to England, late that night, when doctors said the baby was stable enough to travel, his medical team told her that a bed had opened up at the University of California-San Francisco Medical Center and that staffers there were ready to receive him.

She, her son and an EMT boarded a small plane around midnight. Ground ambulances carried them between the hospitals and airports. Amari was diagnosed with respiratory syncytial virus, or RSV, and spent three weeks in the hospital before recovering and returning home.

Then the bill came - The Patient: Amari Vaca, now 1, who was covered by a Cigna policy sponsored by his father's employer at the time. Medical Services: An 86-mile air-ambulance flight from Salinas to San Francisco.

Total Bill: $97,599. Cigna declined to cover any part of the bill.

Cigna determined that Amari's air-ambulance ride was not medically necessary. He could have taken a ground ambulance instead of a plane to cover the nearly 100 roadway miles between Salinas and San Francisco.