In the insurance industry, the claims ratio is one of the most important indicators for understanding the risk level of a business line. A high claims ratio indicates that the number of claims paid out by the insurance company is significantly greater than the premiums received. This situation not only impacts the stability of the insurance company but also impacts policyholders, business operators, and the entire industry ecosystem.
In recent years, Indonesia has seen a significant increase in the value and frequency of claims for certain types of insurance. The causes are diverse—from the economic slowdown that has triggered a rise in bad debts, to rising medical costs, to increasing public mobility, to complex industrial and energy projects. As a result, several insurance lines consistently have the highest claim ratios and have come under scrutiny in industry reports and regulatory oversight.
Understanding the types of insurance with a high claim risk is crucial for both companies and individuals. This information helps determine protection strategies, adjust premium budgets, and ensure that complex risks remain manageable with appropriate measures. This article will comprehensively review the insurance types with the highest claim ratios in Indonesia, the underlying factors, their impact on policyholders, and approaches to maintaining effective insurance coverage.
This discussion is expected to provide industry players, business owners, and insurance policy buyers with sharper insights to make more informed decisions. Let’s begin our in-depth discussion.
What Is the Claims Ratio and Why Is It an Important Indicator?
Claim ratio orclaim ratiois the ratio between the number of claims paid by an insurance company and the total premiums received during a given period. This ratio is usually expressed as a percentage and is one of the main parameters for measuring the financial health and performance of an insurance company.
Why is the Claims Ratio Important?
- Assessing Insurance Company Profitability
A claims ratio that is too high may indicate that the insurance company is paying out a large number of claims compared to the premiums received, resulting in thin profit margins or even losses. - Measuring the Effectiveness of Risk Management and Underwriting
The claims ratio also reflects how well a company performs risk assessment (underwriting) and manages its insurance portfolio. A high claims ratio can signal poorly managed risks or disproportionate claims. - Impact on Premiums and Policy Terms
If the claims ratio is high over the long term, insurance companies may need to increase premiums, tighten policy terms, or limit risk coverage to maintain business stability. - Information for Customers and Business Actors
The claims ratio provides policyholders with an overview of the level of risk in a particular insurance line. This allows them to make more informed and realistic protection decisions.
Ideal Claim Ratio Limits
Ideally, a claims ratio should range from 60% to 80%, allowing for operational costs and company profits. A ratio below 60% could indicate a company is too selective or premiums are too high, while a ratio above 80% indicates high risk and a potential premium increase.
Types of Insurance with the Highest Claim Ratios in Indonesia
Several types of insurance consistently record high claim ratios due to the inherent risk characteristics of their business lines. Below are the insurance lines with the highest claim ratios, based on the latest data and industry trends in Indonesia.
1. Credit Insurance
Credit insurance covers the risk of default by a debtor to a creditor. This type of insurance has the highest claim ratio, reaching more than 80% to 90% in the last few periods.
- Reasons for high claims:
Uncertain economic conditions have led to an increase in Non-Performing Loans (NPLs) so that claims of default have increased significantly. - Impact:
High claims ratios force credit insurance companies to be more selective in underwriting and often increase premiums to keep the business healthy. - Supporting data:
A report from the Indonesian General Insurance Association (AAUI) shows that the credit insurance claim ratio reached 82% in the first half of 2025.
2. Health Insurance
The health insurance claims ratio is in the range 50% to 70% depending on the product and period.
- Reasons for high claims:
The ever-increasing cost of medical care, the high frequency of hospitalizations, and the use of cashless claims that facilitate access to health services. - Impact:
Insurance companies frequently adjust premiums (repricing) and rearrange benefits to maintain business continuity. - Supporting data:
The Financial Services Authority (OJK) reported that the life health insurance claims ratio was around 51.29% in quarter first 2025.
3. Energy and Offshore Insurance
The energy sector and offshore projects have a high risk of claims, with claim ratios reaching more than 80%.
- Reasons for high claims:
The risk of major accidents, heavy equipment damage, and environmental risks that are difficult to predict. - Impact:
Premiums in this sector are relatively high with very strict underwriting. - Supporting data:
The 2022 AAUI report shows an offshore energy insurance claim ratio of 84.9%.
4. Motor Vehicle Insurance
Vehicle insurance is the line with the most frequently received claims.
- Reasons for high claims:
The high number of accidents, floods, and motor vehicle theft cases. - Impact:
The relatively high claim ratio encourages insurance companies to adjust premiums in risk-prone areas.
5. High Risk Property Insurance
This type of insurance covers factory fires, warehouses, and high-risk industrial properties.
- Reasons for high claims:
Fire, natural disasters, and operational risks in industrial facilities. - Impact:
Strict underwriting and implementation of deductibles to manage risk exposure.
The Role of Insurance Brokers in Facing the Era of High Claim Ratios
Amidst the trend of rising claims ratios across various insurance types, the role of insurance brokers is becoming increasingly crucial in ensuring optimal risk management and effective claims settlement. Brokers serve as strategic liaisons between clients and insurance companies, as well as risk advisors, helping formulate the best protection solutions.
1. Choosing the Right Policy and Underwriting
Brokers have expertise in conducting comprehensive risk analyses to determine the insurance products best suited to clients’ needs. With in-depth knowledge of the insurance market, brokers are able to negotiate tighter or more flexible underwriting terms based on their risk profile.
2. Helps Maintain a Healthy Claims Ratio
By guiding clients in risk management, such as implementing proper risk management, safety training, to the use of additional protection such as deductibles and co-insurance Brokers help reduce the frequency and value of excessive claims. This contributes to a healthier claims ratio and more stable premiums.
3. Efficient Claim Process Assistance
When a claim arises, brokers play a crucial role in ensuring all reporting procedures and claim documentation are completed correctly and completely. Brokers facilitate communication between clients and insurance companies, ensuring a swift claim process and minimizing the risk of rejection or delay.
4. Claim Negotiation and Mediation
Brokers also act as mediators in claims disputes. With a strong understanding of insurance policies and regulations, brokers can represent clients in negotiations with insurance companies to ensure claims are fairly resolved.
5. Periodic Policy Updates and Reviews
The business world and risks are constantly changing. Brokers regularly review clients’ insurance policies to ensure coverage remains relevant to current conditions and adjust premiums and policy terms as necessary.
6. Ongoing Education and Consultation
Brokers educate clients about new risks, claims trends, and current insurance regulations. This helps clients stay prepared for changes and make informed insurance decisions.
In an era of high claims ratios, insurance brokers are not just intermediaries, but strategic partners who help manage risk wisely, select the right coverage, and optimize the claims process. This role is crucial for maintaining business continuity and ensuring that insurance protection provides maximum value to policyholders.
Conclusion
High claims ratios across several types of insurance represent a serious challenge for the insurance industry in Indonesia. This situation impacts premiums, the claims process, and underwriting policies, ultimately impacting customers and businesses. By understanding which insurance lines carry the highest claim risk, policy holders can make more informed decisions about insurance products and protection strategies.
The role of an insurance broker in this context is crucial. Brokers not only help select a policy that suits your needs and risk profile, but also provide guidance throughout the claims process to ensure a smooth and effective process. A broker’s appropriate approach can help manage a healthy claims ratio while maintaining premium stability and the quality of insurance services.
For businesses and individuals looking to ensure optimal insurance coverage and a smooth claims process, hiring a professional broker like L&G Insurance Broker is a valuable investment. Our experienced team helps clients manage risk with appropriate protection strategies, perform accurate underwriting, and provide comprehensive claims support.
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