National Insurance Industry Needs Inclusive Breakthrough And Community Approach

JAKARTA - Insurance observer Irvan Rahardjo assesses that insurance inclusion in Indonesia is still very low and an urgent matter to improve, because Indonesia is one of the most disaster-prone countries in the world because it is located in the Pacific Ring of Fire which is surrounded by active and earthquake-prone volcanoes.

According to Irvan, there are two big problems that have been the main obstacle to the development of the insurance sector in Indonesia, namely minimal financial literacy, and low public income.

This condition is also reflected in the contribution of the insurance sector to the national economy, where the ratio of gross premium to Indonesia's Gross Domestic Product (GDP) in 2022 only reached 2.76 percent or decreased from 3.13 percent in the previous year.

"This means that by shrinking the number of Indonesian middle class and the current weak purchasing power of the insurance sector's contribution to GDP, it is increasingly depressed," he told VOI, Saturday, October 4.

On the other hand, Irvan also highlighted the insurance industry's approach which is considered not optimal in reaching the wider community.

According to him, so far the approach taken is still business-to-business (B2B), more targeting corporations than individuals. In fact, there needs to be a transformation towards a business-to-consumer (B2C) approach that touches the needs of the community more directly, especially through the community.

Furthermore, he assessed that collaboration between insurance industry players and research institutions is still very limited. Currently, the cooperation that is established generally only involves regulators and industry associations.

According to him, to encourage inclusive and sustainable growth, it is necessary to take a collaborative approach based on penta helix.

"We have to use the penta helix approach, namely a collaborative model involving five main elements, namely the government, academics, businesses (the private sector), the community (community), and the media, to achieve joint goals in a synergistic and sustainable manner to maintain product quality and protection," he said.