Governance, Compliance and Risk -The Indonesia Insurance Market Outlook: Ken Research


Ken Research’s Governance, Risk and Compliance-The Indonesian Insurance Industry provides an overview of the insurance regulatory framework in Indonesia. It gives the latest key changes and changes expected in the country’s insurance regulatory framework. The report provides key regulations and market practices related to different types of the insurance product in the country and rules and regulations pertaining to key classes of compulsory insurance, and the scope of non-admitted insurance in Indonesia. The key parameters including licensing requirements, permitted foreign direct investment, minimum capital requirements, solvency and reserve requirements, and investment regulations and details of the tax and legal systems in the country are detailed in the report.

Due to disruption in the market, technology, and innovation coupled with consumer expectation, the insurance industry is dynamic and ever-changing. Compared to other ASEAN nations, the Indonesia insurance market is in the early stages of development. Though it has seen promising economic growth over the past years, the penetration rate of the insurance market is very low. This makes Indonesia one of the most attractive markets for exploiting its large unpenetrated market. The growing population and expanding consumer class with high disposable income makes Indonesia an attractive market. Increasing life expectancy, financial literacy are other factors that add up to the growing demand.

Currently, the market is dominated by a few insurers who offer few and narrow products like life insurances that are sold through agency forces and bancassurance channels. While many local insurers are selling traditional participating endowments, they are entering into investment-linked products to compete with foreign entrants. Since 2017, many foreign players have entered the market bringing resources and competition into the country.

The current players are heavily relying on innovation in production technology to improve their efficiency and life. In the coming years, companies can be expected to capture market share if there exists financial flexibility to invest in optimal strategies and ensure process improvements. Since the Indonesian subcontinent lies in an earthquake belt, the scope for disaster risk insurance is also immense. The Financial minister of the country announced that natural disaster financing strategy and disaster risk insurance scheme would be adopted soon to help them prepare for the damages. The government also raised concerns about growing economic losses from terrorism but believes the insurance sector can provide solutions to the casualties. It was observed that the nature of terrorism has changed from large scale events to small scale, less sophisticated acts of terrorism where insurers can help mitigate the risk of loss by offering solutions that minimize risk to government’s funds.

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Ankur Gupta, Head Marketing & Communications



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