Indonesia general insurance industry to surpass $7 billion by 2027
Property insurance is the largest general insurance line
The Indonesian general insurance industry is forecast to grow at a compound annual growth rate (CAGR) of nine per cent from ICR77.2 trillion ($5.3 billion) in 2023 to IDR108.8 trillion ($7.1 billion) in 2027 – in terms of gross written premiums (GWP) – according to data and analytics company Global Data.
According to Global Data’s Insurance Database, Indonesia’s general insurance is estimated to grow by 10.2 per cent in 2022 and eight per cent in 2023, supported by a rise in demand for property insurance policies due to recurring natural catastrophic (NatCat) events, as well as strong economic growth.
Manogna Vangari, Insurance Analyst at GlobalData, said: “The Indonesian general insurance industry rebounded strongly in 2022 after declining for two consecutive years.
“The growth is driven by a strong economic recovery and increased frequency of extreme weather events that have led to an increase in the demand for natural catastrophic insurance products.”
Property insurance is the largest general insurance line, which is expected to account for a 34.5 per cent share in terms of GWP in 2023. It is expected to grow at a CAGR of 8.6 per cent from 2023–27. Growth in residential property sales and the country’s increased exposure to recurring NatCat events will drive the growth of property insurance in the country.
According to the National Disaster Management Agency, Indonesia recorded 3,544 NatCat events in 2022, including 28 earthquakes, 1,531 floods, and 1,068 other extreme weather events. This caused damages to 95,403 properties, including severe damages to 20,205 properties, resulting in an estimated incurred loss of IDR2.2 trillion ($151.1 million) for property insurance companies in 2022.
Financial lines insurance is the second largest insurance line, which is expected to account for a 22.1 per cent share of general insurance premiums in 2023, followed by motor insurance, which is expecting a 17.7 per cent share.
Other insurance lines including liability, personal accident and health (PA&H), marine, aviation, and transit (MAT) will account for the remaining 25.7 per cent share of GWP in 2023.
Vangari concluded: “High NatCat-related losses are a cause of concern for Indonesian insurers. However, companies are also expected to increase premium rates, which will support growth in the industry over the next five years. The industry’s growth will also be further supported by a strong economic upswing.”