Liga Asuransi – The insurance industry in Indonesia is moving dynamically, facing challenges while taking advantage of opportunities that present themselves amidst economic and technological changes. With optimism regarding the increase in the 2025 UMP and increasingly widespread digitalization, this sector has the potential to record significant growth in insurance penetration and density. This article will discuss the latest news from the world of insurance, including strategic steps by insurance companies, technological innovations that encourage market penetration, and promising future opportunities. Enjoy reading this important summary of the development of the insurance industry in Indonesia and the world.
Asuransi Bintang Tbk Officially Transfers Sharia Business Unit, OJK Revokes Operational License
Jakarta, 21 November 2024 – PT Asuransi Bintang Tbk (ASBI) officially transferred its sharia business unit portfolio. This ended the journey of the sharia business unit (UUS) in the general insurance company, which was marked by the revocation of its operational permit by the Financial Services Authority (OJK).
According to the OJK’s official announcement, Bintang Insurance has completed the entire process of transferring its sharia membership portfolio. With the completion of this process, management submitted an application to close the UUS permit.
“The Financial Services Authority has stipulated Decree of Members of the OJK Board of Commissioners Number KEP-642/PD.02/2024 on November 7 2024 regarding the revocation of the permit to establish a Sharia Unit at PT Asuransi Bintang Tbk,” as stated on the official OJK website.
No Longer Operating with Sharia Principles
With this decision, PT Asuransi Bintang Tbk is prohibited from carrying out business activities based on sharia principles. This step makes Bintang Insurance one of 12 insurance companies that have transferred their sharia business portfolio.
However, OJK confirmed that 29 other companies would continue their sharia business. Mirza Adityaswara, Deputy Chair of the OJK Board of Commissioners, explained that all insurance companies are required to complete the UUS separation process before the 2026 deadline.
“OJK continues to monitor the company’s readiness to implement the Sharia Unit Separation Work Plan (RKPUS), so that the company has sufficient time for the spin-off before the deadline,” said Mirza at the September 2024 Board of Commissioners Meeting.
Shariah Unit Separation Options
Based on POJK Number 11 of 2023, companies have two options to separate their sharia units:
- Establishing a new company in the form of sharia insurance or sharia reinsurance, followed by portfolio transfer from UUS to the new entity.
- Transferring the entire membership portfolio UUS to sharia insurance or sharia reinsurance companies that already have operational permits.
These two methods aim to ensure that companies continue to comply with regulations without reducing protection for insurance participants.
The Future of the Sharia Insurance Industry
This transfer and spin-off process is an important step in encouraging the independence of the sharia insurance business in Indonesia. With a mature strategy, it is hoped that this industry will continue to develop and make a significant contribution to the sharia-based economy.
Bintang Insurance’s move to close its sharia unit reflects the dynamics in the insurance industry. Going forward, a focus on regulatory compliance and product innovation is expected to be key to growth in this sector.
Digital Technology Encourages Insurance Penetration in Indonesia, OJK Targets 3.2% by 2027
Jakarta, 22 November 2024 – Digital technology is the main key in increasing insurance penetration in Indonesia. In the 2023-2027 insurance development and strengthening roadmap, the Financial Services Authority (OJK) targets the domestic insurance penetration rate to reach 3.2% in 2027, up from the current position.
Iwan Pasila, Deputy Commissioner for Supervision of Insurance, Guarantees and Pension Funds at OJK, emphasized that the role of digital technology is not only limited to cost efficiency, but also to mitigating broader risks.
“The impact of digital technology support can be optimized, especially in reaching more market segments and improving customer experience,” said Iwan when interviewed, Friday (22/11/2024).
Closer to Customers Through Digitalization
Iwan explained that digital technology allows insurance companies to get closer to customers. With digitalization, insurance services can be faster, easier and more efficient.
“Digitalization helps insurance companies penetrate market segments that were previously difficult to reach using conventional methods, such as brokers or agencies. This technology also allows for significant operational cost savings,” he said.
For example, in group health insurance products, the development of digital connections through Application Programming Interfaces (APIs) allows insurance companies to integrate medical services in real time. This makes the claims and service process easier and more transparent.
Reducing Dependence on Traditional Roles
Digital transformation is also changing the operational landscape in the insurance industry. According to Iwan, technology allows companies to reduce dependence on traditional intermediaries such as insurance brokers.
“Technological developments enable medical information and related services to be accessed directly by customers via digital connections. This makes services more feasible without having to go through intermediaries,” he added.
Towards an Inclusive Insurance Future
With the roadmap that has been designed, OJK is optimistic that digitalization will open up new opportunities in the insurance sector. Technology is projected to be able to expand service coverage to communities previously untouched by insurance.
Through collaboration between regulators, insurance companies and technology providers, the vision to achieve insurance penetration of 3.2% by 2027 is expected to be realized. With the right strategy, digital technology will not only strengthen efficiency, but also ensure that the benefits of insurance can be felt by more Indonesians.
Jasindo is Optimistic that the 2025 UMP Increase Will Encourage Growth in Insurance Density
Jakarta, 20 November 2024 – PT Asuransi Jasa Indonesia (Jasindo) welcomes optimism regarding the plan to increase the provincial minimum wage (UMP) in 2025. This increase is believed to have a positive impact on increasing insurance density, which reflects the average public expenditure on insurance products.
Jasindo’s Director of Business Development, Diwe Novara, explained that the previous trend of increasing the UMP had shown a positive relationship with the growth in insurance density. For example, in 2024, an average increase in the UMP of 3.5% will succeed in driving insurance density growth to 7.2%.
“Insurance density in September 2024 was recorded at IDR 2.08 million, an increase from IDR 1.94 million in 2023. This shows the real impact of the increase in the UMP on the community’s ability to allocate funds for insurance,” said Diwe.
Challenge: Insurance Literacy and Inclusion
However, Diwe highlighted that increasing insurance density does not necessarily increase insurance inclusion. Based on 2022 data, the insurance literacy rate reached 31.72%, while insurance inclusion was only 16.63%. This means that even though people understand insurance, not all of them buy insurance products.
“The increase in the UMP creates greater financial space, but does not automatically encourage people to buy insurance. This is caused by low levels of public trust, products that are not yet relevant to their needs, and limited purchasing access,” he explained.
Jasindo Strategy: Socialization and Innovation
Overcoming this challenge, Jasindo continues to strengthen its product and service outreach strategy to the community. The Jasindo team spread throughout Indonesia focuses on market penetration, both to companies and individuals.
“We are taking a direct approach to increase public awareness of the importance of insurance. Apart from that, Jasindo is also trying to develop products that are more relevant and easily accessible, so that people feel comfortable and trust our services,” added Diwe.
The Future of Insurance Density
With continued intensified efforts, Jasindo is optimistic that the 2025 UMP increase can provide momentum for the growth of the insurance industry in Indonesia. It is hoped that the increase in density will not only occur in numbers, but also in the quality of penetration and product relevance in society.
“We believe that collaboration between product innovation, massive outreach and government policy can create an inclusive and sustainable insurance ecosystem,” he concluded.
The Global Insurtech Market is Projected to Grow Rapidly to IDR 1,218 Trillion
Jakarta, 22 November 2024 – Insurance technology market or insurtech The global market is on a rapid growth path. According to Technavio’s latest report, this industry is expected to reach a value of US$77.41 billion (equivalent to IDR 1,218 trillion) in the period 2024 to 2028, with a compound annual growth rate (CAGR) of 42.35 percent.
Increasing business efficiency and close collaboration between investors and insurtech companies are the two main factors driving this growth.
Advanced Technology Drives Innovation
Technology like machine learning And Artificial Intelligence (AI) is the backbone in the development of insurtech services. With this technology, companies can deliver better personalized solutions to meet customers’ specific needs.
In addition, tracking and monitoring features are available real-time enabling more careful risk management and data-based decision making. This adds value to insurance companies in providing a better customer experience and increasing operational efficiency.
Challenges Amidst Optimism
However, the adoption of this advanced technology is not without obstacles. The Technavio report notes that high initial investment costs are one of the main obstacles. Additionally, insurance staff require special training to understand and make optimal use of technology.
“Integrating technology with banking and brokerage services requires technical expertise that currently remains a challenge for many companies,” the report wrote.
However, the insurtech market continues to show high optimism, especially because of its potential to revolutionize the way insurance companies operate.
The Future of Insurtech: Innovate or Get Left Behind
Technavio said that adaptation to advanced technology will be a key factor in the success of insurance companies in facing competition in this rapidly growing industry.
For companies that want to stay relevant, technological innovation is no longer an option, but a necessity. As the insurtech market continues to develop, industry players are expected to take advantage of opportunities to create services that are more efficient, innovative and relevant to the needs of today’s customers.
Challenges and Opportunities for the General Insurance Industry in 2025
Jakarta, 19 November 2024 – Indonesia’s general insurance industry faces various challenges towards 2025, although it continues to show positive growth. Data as of September 2024 recorded the aggregate value of the industry reaching IDR 1,929 trillion, growing six percent annually (year-on-year).
Deputy Chair of the Indonesian General Insurance Association (AAUI) for Inter-Institutional Cooperation, Muhammad Iqbal, said that solid capital support remains the foundation for commercial insurance amidst the downward trend. This was conveyed in the seminar Indonesia Economy & Financial Outlook 2025 in Jakarta, Tuesday, November 19 2024.
Challenges at Horizon 2025
Iqbal highlighted a number of strategic challenges facing the industry:
- Low Penetration and Insurance Density
Even though the level of public literacy regarding insurance has increased, the gap between literacy and inclusion is still quite large. Many people already know the benefits of insurance but are not yet confident about having it.
“This indicates that protection through insurance in Indonesia is not yet a priority need,” said Iqbal.
- Digitalization and Technological Innovation
Digital transformation brings new challenges, especially in product innovation, services and data security. Insurance companies are required to accelerate adaptation to remain relevant and competitive in the technological era. - ESG Implementation and Green Business Ecosystem
Application of principles Environmental, Social, and Governance (ESG) is the next challenge. Industry must innovate to support sustainable business, in line with the global trend towards a green economy. - Competition and Risk Analysis
Increasingly tight competition between insurance companies is forcing industry players to improve risk analysis capabilities and operational efficiency. - Capital and Governance
The need to strengthen capital and better corporate governance, including implementing the separation of sharia units, is a major concern ahead of 2025.
Factors Driving Optimism
Even though the challenges are quite large, the general insurance industry has a number of driving factors to continue to grow:
- Solid Financial Health
Both insurance and reinsurance companies, conventional and sharia, show good financial stability. - Strengthened Consumer Protection
It is hoped that the new guidelines regarding credit insurance, guarantees and product management will simplify the application process. - Service Innovation
Simplification of product licensing and governance creates opportunities to improve customer experience and increase business efficiency.
Iqbal is optimistic that with collaboration between stakeholders, the Indonesian general insurance industry can answer challenges while taking advantage of existing opportunities.
“The key to success lies in innovation, strengthening governance, and a more adaptive approach to community needs,” he concluded.
Towards a More Resilient Insurance Industry
With strategic steps and the courage to innovate, the general insurance industry has a great opportunity to not only survive but also develop amidst the national transition. The journey towards 2025 is an important momentum for all stakeholders to strengthen an insurance ecosystem that is inclusive, sustainable and relevant to the needs of modern society.
Prudential Indonesia Records Positive Growth of IDR 15.5 trillion in Quarter III/2024, Marketers Remain the Main Pillar
PT Prudential Life Assurance, or better known as Prudential Indonesia, recorded brilliant achievements until the third quarter of 2024, with total premium income of IDR 15.5 trillion, recording growth of 4.4% compared to the previous year. This figure is proof of the company’s strength in providing relevant financial solutions for the Indonesian people.
According to Karin Zulkarnaen, Chief Customer & Marketing Officer of Prudential Indonesia, this growth was driven by two main factors: first, an increase in new business premiums of 7%; second, a significant surge in traditional insurance products which grew by 29%.
“The financial solutions we offer continue to gain public trust. “The majority of our sales are still driven by reliable marketers,” said Karin in an interview with Bisnis on Thursday, November 21 2024.
The Role of Marketers: Still Much Needed
Based on data from the Indonesian Life Insurance Association (AAJI), although digital or e-commerce channels have shown rapid growth in the last five years, their contribution to total life insurance premium income is still not large.
This underlines the importance of marketers in the insurance product sales process. Karin added, even though Indonesian people are increasingly technology savvy, many still feel the need to consult directly with marketers to understand various product features and determine the right amount of coverage before deciding to buy life insurance.
“Feedback from customers shows that they still feel they need in-depth explanations about products, and that is a role that cannot simply be replaced by technology,” said Karin.
Digitalization to Support Marketers
However, Prudential Indonesia does not remain silent in utilizing technology to support their operations. This company has adopted various digital technologies that simplify the policy sales and service process, to make it faster, more efficient and more comfortable for customers.
Karin explained that marketers are now equipped with sophisticated applications that enable them to create more personalized product proposals according to customer needs. This application also provides direct access to real-time sales reports and online training that can be accessed anytime and anywhere, providing high flexibility for marketers who have high mobility.
“These features enable our marketers to work more efficiently, facilitate access to customers, and provide better service,” he added.
Combination of Marketers and Technology: The Key to Life Insurance Success
The combination of the vital role of marketers and the use of technology is the formula for success for Prudential Indonesia in recording significant growth. This shows that even though the world is increasingly connected through technology, human interaction in terms of life insurance sales is still very much needed, especially in providing customers with a clearer understanding of the products they choose.
By continuing to adapt to technological developments, Prudential Indonesia shows its commitment to remaining a trusted partner for customers in planning their finances and future.
Prudential Indonesia proves that the future of life insurance is not only about digitalization, but also how to continue to prioritize personalized services based on customer needs.
OJK Encourages Protection of State Property to Increase Insurance Penetration
The Financial Services Authority (OJK) notes that the contribution of the national insurance industry to Indonesia’s Gross Domestic Product (GDP) is still below 5%, a figure that is considered low for a country with a high risk of natural disasters. In an effort to encourage insurance penetration, OJK hopes that the government will start protecting state property (BMN), as a strategic step to expand insurance coverage in the country.
Ogi Prastomiyono, Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision (PPDP), said that Indonesia faces significant potential risks of natural disasters, so it is important for the government to ensure that state assets are protected with insurance. “We hope that the government will protect state property. These assets are at risk of damage due to disasters, and must be insured. We will work with the relevant ministries to make this happen,” said Ogi at the OECD/IOPS/OJK Global Forum event. which was held at the Padma Legian Hotel, Bali, on Tuesday (19/11/2024).
BMN Insurance Protection Expansion Plan
Currently, state property insurance only covers immovable assets, such as buildings and structures. However, in the future, BMN insurance will be expanded to cover movable assets, including government-owned official vehicles. This plan is being prepared for next year, with the hope that securing movable assets can also provide wider benefits for the country.
This protection scheme will involve the Ministry of Finance which will record an inventory of state-owned assets. The data will then be submitted to the insurance consortium which will be tasked with providing protection to BMN. The premiums paid will be sourced from the State Revenue and Expenditure Budget (APBN), so the cost of this protection will be the state’s burden.
Challenges in Increasing Insurance Awareness
Meanwhile, Ogi also highlighted that public awareness regarding the importance of insurance is still low. Many consider insurance to be an obligation, not a necessity, so this has an impact on low insurance penetration in Indonesia. “Insurance is still considered an obligation, not a necessity. The share of insurance assets in our GDP is still less than 5%, which shows that many people do not consider insurance as an important part of their financial protection,” he said.
OJK continues to strive to do so intensification and extensification insurance in Indonesia with various initiatives, including strengthening protection for state property. Ogi emphasized that these steps aim to improve public awareness of the benefits of insurance, especially in facing various risks that may occur.
BMN Protection as a Strategic Step
The step to expand BMN insurance coverage is one strategy that is expected to encourage insurance penetration in Indonesia. Apart from protecting state assets, this step can also increase public understanding of the importance of insurance in protecting various existing risks, both individual and institutional.
With broader protection for state property and OJK’s efforts to increase insurance awareness, it is hoped that insurance penetration in Indonesia can grow more significantly in the future, provide more protection to the public, and contribute to strengthening the national economy.
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