The life insurance sector in Indonesia is predicted to grow at a CAGR of 3.8% between 2024 and 2028. This means it will grow from IDR161.3trn ($10.5bn) in 204 to $12.1bn in 2028 in terms of GWP.
However, there will be declines according to GlobalData and its Insurance Database. It expects the shrinking of the life insurance sector in Indonesia that began in 2022 will continue in 2023 and 2024. This will be driven by a drop in the sales of endowment insurance policies, which are expected to account for nearly 70% of life insurance premiums in 2024.
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Manogna Vangari, insurance analyst at GlobalData, said: “The Indonesian life insurance industry is expected to decline by 2% in 2024, after witnessing a 5.4% decline in 2023. The decline can be attributed to a decrease in the sales of investment-linked insurance products due to heightened volatility in global financial markets, as well as a decline in new premiums due to changing consumer preferences.
“However, the industry is set to make a turnaround in 2025, driven by an increase in the demand for traditional life insurance policies and changes in the country’s demographic factors.”
Furthermore, endowment insurance is the largest product in the Indonesian life insurance industry, accounting for 69.3% of the GWP in 2024. It is expected to decline by 7% in 2024 due to high market volatility that has resulted in lower returns over an extended period.
Vangari added: “Positive regulatory developments are expected to support endowment insurance growth. In January 2024, the Financial Services Authority of Indonesia (OJK) issued a regulation that provides guidelines on the supervision of the marketing of investment-linked insurance products. These include consumer data protection principles, rights and obligations of potential consumers, the inclusion of fees and commissions/rewards to marketing agents/intermediaries, and handling complaints and dispute resolution.”
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By GlobalData
