The general insurance industry in Indonesia is set to grow at a CAGR of 11.3% from IDR110.94trn ($7.3bn) in 2024 to IDR170trn ($11.5bn) in 2028, in terms of GWP.
In addition, the general insurance industry is predicted to grow by 14.8% in 2024. This is according to GlobalData’s Insurance Database, which explains the growth is expected to be driven by favourable regulatory reforms, a rising need to natural catastrophic (Nat-Cat) insurance policies and government support for credit distribution.
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Property insurance is the leading line of business in the sector and expected to account for 37.2% of general insurance in Indonesia GWP in 2024. It is also expected to grow by 19.9% in 2024, supported by Nat-Cat demand.
Furthermore, favorable government policies to support the housing sector will have a positive effect on residential property sales. These include the extension of the relaxation of the loan-to-value (LTV) ratio for property loans to a maximum of 100% until December 2024, as well as VAT exemptions on houses below IDR2.0bn from November 2023 until June 2024.
As a result, property insurance is expected to grow at a CAGR of 15.4% during 2024-2028.
Swetansha Chauhan, insurance analyst at GlobalData, said: “The Indonesian general insurance industry is expected to grow by 24% in 2023, registering the highest growth during the last 10 years. This growth is attributed to a robust economic recovery after the pandemic, a rise in residential property sales, and increasing demand for Nat-Cat insurance policies due to rising economic losses caused by extreme weather events. The growth is expected to normalise in 2024 and 2025 in line with the anticipated slowdown in the global economy that might trigger market volatility.
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By GlobalData“A robust economic recovery and rising disposable income have led to a rise in the sale of residential properties, which will also support property insurance growth. According to Bank Indonesia, residential property sales increased by 3.37% in the fourth quarter of 2023 as compared to the same period in the previous year.”
