Indonesia Insurance Report Q1 2015 - New Market Study Published

Indonesia's insurance industry is experiencing a period of rapid growth, with both the life and non-life segments reflecting healthy gains in terms of premium value throughout our forecast period as well as market penetration (though this remains relatively low for non-life). Healthy domestic economic growth is providing a boost to the insurance market, while regulatory changes are further enabling sustainable longer term growth.

The non-life segment in Indonesia is dominated by motor vehicle insurance, which accounts for around a quarter of non-life insurance in the country. We expect to see double digit growth in terms of motor vehicle insurance from 2015 onwards, as the national fleet expands, including passenger cars, commercial vehicles and the heavy truck fleet, based on domestic economic growth. Property insurance (the second biggest non-life line in Indonesia) is also expected to increase, recovering from a decline in 2014, though growth will be more subdued due to intense price competition in the market. The overall non-life segment is relatively under-developed, with low penetration of around 0.5% (premiums as a percentage of GDP), which we expect will remain largely unchanged in the short term.

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The life segment in Indonesia represents a substantial opportunity for growth, despite the relatively low life penetration of 1.6% of GDP at present. Poor state provision of both medical and retirement benefits mean that households that can afford individual cover and savings products are highly inclined to do so. With domestic economic growth lending strength to a rapidly expanding middle class, we expect to see growth of close to 18% in terms of gross life premiums written in 2015, with similar growth expected throughout the remainder of the forecast period.

The overall operating environment in Indonesia is also improving, with industry regulator Otoritas Jasa Keuangan (OJK) proving more efficient than its predecessor. An update to the 1992...

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