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Indonesia Non Life Insurance Premium

  • jerrybenny34917
  • Nov 21, 2023

Indonesia Non Life Insurance Premium – The economies of the member countries of the Association of Southeast Asian Nations (ASEAN) are strongly influenced by global financial and geopolitical conditions. Growing trade protectionism and looming threats of a full-scale trade war between the US and China, geopolitical tensions in and around the region – partly due to China’s growing influence – and the tightening of global financial policy asserted by the United States (US). America) The Federal Reserve’s temporary interest rate hike and plans to shrink its $4.5 trillion balance sheet are among the uncertainties that governments in these countries have to deal with.

However, ASEAN markets remain cautious and its economies are expected to have good prospects for the year and beyond. The CLM economies (Cambodia, Lao PDR and Myanmar) enjoy 7 percent growth while the rest average around 4.6 percent. This in turn has created a favorable outlook for the insurance sector in the region.

Indonesia Non Life Insurance Premium

Indonesia Non Life Insurance Premium

In 2016, the insurance coverage ratio in ASEAN reached 3.4%, almost half of the global average of 6%. However, this number will rise as ASEAN economies continue to grow.

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According to a 2017 report approved by the ASEAN Insurance Council, the life insurance business accounts for the lion’s share of total insurance premiums in the region at 73 percent compared to a global share of 55 percent. However, ASEAN’s life insurance rate of 2.4% still lags behind the global average of 3.5%. However, the life insurance market in ASEAN has been growing. Between 2011 and 2016, it grew by 9.2 percent per year, significantly higher than the average economic growth in the region.

In terms of non-life insurance premiums, the gap is much wider at just one percent of gross domestic product (GDP), compared to a global average of 2.8 percent. However, the gap is closing rapidly as the ASEAN non-life insurance market outpaced regional economic growth by one percentage point between 2011 and 2016 (6.1% vs. 5.1%).

According to Moody’s, which gave a positive outlook for the Asia-Pacific insurance market for the year, increased levels of prosperity will improve long-term demand for life insurance. Additionally, the boom in the insurance technology industry is likely to disrupt existing insurance markets and make insurance more accessible to different segments of society. However, progress is still slow.

In addition, the ASEAN region is a disaster-prone region, hence the need for disaster risk financing that can help ASEAN members become financially resilient to natural disasters as part of broader disaster risk management strategies. . According to the World Bank, the region suffers an average of more than 4.4 billion US dollars in damage caused by natural disasters each year, and this number increases with each passing year. Now more than ever, the need for ASEAN members to develop appropriate disaster financing programs to reduce the financial burden imposed by natural disasters on governments is timely.

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Another area to consider is insurance for long-term infrastructure plans. Financial services firm DBS predicts that the infrastructure investment gap in the region will reach US$3 trillion between 2016 and 2020. Current banks and capital market financiers are unable to provide the necessary financing to meet ASEAN member states’ extensive infrastructure plans. Therefore, long-term investors such as insurance companies can step in and be a useful cog in the region’s financial architecture. Among other things, they can provide predictable long-term capital to private parties and the public sector. The EU-ASEAN Chamber of Commerce proposes five key areas that should be addressed in view of promoting long-term investments by insurance companies – comprehensive regulation of infrastructure investment. capital market development; support for green finance; Action to develop hybrid financing and pipeline of bankable projects.

In short, growth in the insurance market will benefit ASEAN governments and their citizens. However, more needs to be done to address the uninsured and milk the potential benefits of insurance for long infrastructure investments.

The life and non-life insurance market in Indonesia is segmented by type of insurance (life and non-life insurance) and distribution channels (direct, agency, banks, online and other distribution channels). Market size and forecasts in terms of value (US$ billion) are provided for all the above segments.

Indonesia Non Life Insurance Premium

The life and non-life insurance market in Indonesia is expected to grow from USD 21.54 billion in 2023 to USD 32.01 billion in 2028, at a CAGR of 8.24% during the forecast period (2028-2023), based on the value of direct of the entry. premium.

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Indonesia’s life and non-life insurance market is well developed and supported by strong capital, supporting a sustainable outlook for the industry. Gross written premiums (GPW) for credit insurance, the third largest business segment of the market, increased by 86.2% to IDR 5.7 billion in 2020. Property insurance, the largest business sector, also showed GPW growth of 9.7% to IDR 20.9 trillion. . However, motor insurance GPW increased modestly by 0.3%. Improved underwriting discipline, continued interest rate increases, reduced catastrophic risk and improved markets for commercial and private vehicles in the first half of 2020.

In addition, these factors have led to high levels of underwriting in the Indonesian property and casualty insurance industry. The insurance sector in Indonesia produces less than 1% of the country’s gross domestic product (GDP). Its permeability and density are lower than the regional standard. With gross premiums at 1.99 percent of GDP versus the 3.9 percent average for emerging Asia and insurance density at $82 per capita versus $207 for emerging Asia, the industry has plenty of room for growth. According to data from March 2022, there are around 152 insurance companies and 227 insurance brokers working in the country. Life insurance is the largest segment, earning 40% of total gross premiums in 2020. After that, social insurance has a 39% share, and so on. Life and reinsurance with 19% of the total. Compulsory insurance is 2.6% of total premiums. The gross share of Islamic insurance was 3.2% of total insurance income.

The InsurTech sector has seen a lot of technology growth and investment in recent years. Traditional insurance sectors such as health, auto and commercial are being transformed by new digital startups. New technologies such as artificial intelligence and the Internet of Things have restructured insurance data, which is the foundation of the insurance industry.

This section discusses the key market trends shaping the Indonesian life and non-life insurance market, according to our research experts:

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Executives have argued that the insurance industry tends to benefit disproportionately from economic developments. If the economic development is 5.8-5.9%, the insurance market should grow by 15%. Growth in the insurance market is higher than that of many other industries.

The overall insurance rate in the country of 264 million people is among the lowest in the world, at less than 2 percent (4.5 million Indonesians have insurance). Half of Indonesia’s population is under the age of 30, and the number of millennials (17-35 years old) in Indonesia is now 79.5 million. The outlook for Indonesia’s insurance industry, both life and non-life sectors, was balanced, with companies showing steady growth, strong profit margins and adequate reinsurance support. In addition, the outlook stated that risk in terms of assets held is within acceptable limits and the sector is well managed.

GDP per capita is a measure often used to determine economic growth and potential productivity gains. It is calculated by taking the gross domestic product and dividing it by the total population of the country. GDP per capita is a very important measure of a country’s economic strength, and a positive change is an indicator of economic growth. Per capita income in Indonesia has increased in recent years and is expected to increase further. Insurance density per capita in Indonesia increases year by year as living standards change and the population’s disposable income increases. Insurance density is expected to increase by more than 5% during the forecast period.

Indonesia Non Life Insurance Premium

Compared to rich and emerging economies, the insurance industry in Indonesia is changing. Key performance measures for the insurance sector, insurance penetration and density in Indonesia are very low. In addition, there is a significant difference in insurance coverage and value which highlights the risky nature of the country. Insurance coverage ratio (calculated as the ratio of paid premiums to GDP) increased from around 5% in 2020 to 7-10% in 2021 in Indonesia as these important parameters grow at a steady rate.

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Although this is a significant improvement, penetration is higher in the world (6.13%) and developing Asian economies (5.62%). The insurance industry has shown a continuous increase in insurance penetration year after year and future growth is predicted.

Indonesia’s life and non-insurance market is semi-consolidated. This market is driven by several domestic and foreign players in the market. The market is affordable as the demand for life and non-life insurance has increased tremendously due to the increased awareness of people about insurance after the Covid-19 pandemic.

Some of the leading players are on the market in Austria

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