Indonesia’s life insurance sector on course to hit $12 billion by 2028 – GlobalData
Indonesia’s life insurance sector on course to hit $12 billion by 2028 – GlobalData | Insurance Business Asia
Life & Health
Indonesia’s life insurance sector on course to hit $12 billion by 2028 – GlobalData
Report dives deep into various life insurance products’ growth trajectories
Life & Health
By
Roxanne Libatique
The life insurance sector in Indonesia is on a trajectory to achieve a valuation of $12 billion in gross written premiums (GWP) by the year 2028, according to a recent analysis by GlobalData.
This growth is forecasted at a compound annual growth rate (CAGR) of 3.8% from the year 2024, escalating from IDR161.3 trillion (US$10.5 billion) to IDR187.2 trillion (US$12.1 billion) within a four-year span.
This optimistic outlook emerges despite a preceding phase of slowed growth, highlighted by a downturn in the sales of endowment insurance policies, expected to dominate life insurance premiums by nearly 70% in 2024.
Indonesian life insurance market forecasts
Insights from GlobalData’s Insurance Database suggested a looming 2.0% shrinkage in the industry in 2024, following a 5.4% reduction in 2023. Factors contributing to this trend include a downturn in investment-linked insurance product sales amid global financial uncertainties and a shift in consumer preference, impacting new premium acquisitions.
Nonetheless, a resurgence is anticipated in 2025, fuelled by a rising demand for traditional life insurance offerings and evolving demographic dynamics in Indonesia.
Indonesian endowment insurance market forecasts
Endowment insurance, claiming a substantial 69.3% of the GWP in 2024, is foreseen to witness a 7.0% decrease in the same year, subsequent to a 10.9% fall in 2023.
These contractions are largely attributed to enduring market volatilities, deterring long-term returns and swaying consumer interest towards more traditional insurance plans focused on long-term security and protection.
In a bid to counteract these trends, regulatory enhancements initiated by the Financial Services Authority of Indonesia (OJK) in January, aimed at reinforcing investment-linked insurance product marketing, are expected to cultivate consumer trust and favourably impact endowment insurance growth, with a projected CAGR of 1% through 2024 to 2028.
Indonesian PA&H insurance market forecasts
Additionally, the personal accident and health (PA&H) insurance category, positioned as the industry’s second-largest segment and representing 13.8% of the GWP in 2024, is poised for a 13.1% expansion in the same year.
The segment’s growth is bolstered by an uptick in health awareness, escalating medical expenses, and demographic shifts, including an aging population and extended life expectancy projections. The PA&H insurance segment is projected to exhibit a CAGR of 10.8% between 2024 and 2028.
Indonesian term life insurance market forecasts
Term life insurance, accounting for an estimated 12.9% share of Indonesia’s life insurance GWP in 2024, is slated for a 9.8% growth due to demographic changes and an increase in consumer disposable income.
Innovations by insurers, including the introduction of cost-effective term insurance plans, are anticipated to further stimulate term life insurance growth, with an expected CAGR of 7.9% from 2024 to 2028.
Commenting on the market update, GlobalData insurance analyst Manogna Vangari said: “Growing awareness of financial protection, rising disposable income, changing demographic factors, and favourable regulatory and product developments are expected to support growth in the Indonesian life insurance industry over the next five years.”
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