Indonesia life insurance industry to grow to $17.4b in 2025
After rebounding in 2021, the industry is set for a massive growth trajectory.
Indonesia’s life insurance industry is expected to grow at a compound annual growth rate (CAGR) of 8.9% from $11.8b (IDR173t) in 2020 to $17.4b (IDR265.3t) in 2025, according to GlobalData.
After dropping by 6.5% in 2020 to $11.8b (IDR173t) from $13b (IDR185.1t) in 2019, the industry recovered in 2021 supported by a stable macroeconomic environment led by the government’s accommodating fiscal and monetary policy. This trend is expected to continue in 2022 with the Indonesian life insurance industry growing by 8.5%.
GlobalData predicted that the life insurance industry in the country is poised for a strong recovery in 2022 driven by increased insurance awareness due to the COVID-19 pandemic and improving economic conditions.
GlobalData’s report revealed that endowment is the leading business line in Indonesia’s life insurance industry, accounting for over 82% of the gross written premium (GWP) in 2020. Stable market returns on unit-linked products despite a pandemic-driven slowdown in 2020 and 2021 supported demand for endowment products.
In 2020, the regulator allowed many insurers to sell unit-linked products online, thereby increasing its accessibility and aiding growth. These factors will continue to support endowment insurance which is expected to grow by 8.2% in 2022.
Meanwhile, protection insurance products, such as term life and personal accident and health (PA&H), collectively accounted for 15% of the life insurance GWP in 2020. Both these lines are expected to record a growth of around 9% each in 2022.
GlobalData said PA&H insurance in Indonesia is mostly sold as an add-on to the government’s universal health insurance scheme. Whilst the universal scheme covers basic healthcare costs, add-on insurance covers the remaining healthcare costs up to the policy limit and provides additional facilities such as shorter-wait time. Around 10% of the population in the country avails add-on insurance.
“Growth in private healthcare, as well as traction in remote health services, will emerge as a key growth driver for PA&H insurance. With the rise in the high-income population and people seeking private healthcare, insurers are developing premium health insurance products. Insurers are also enhancing the partnership with digital healthcare providers to increase coverage,” GlobalData observed.