Insurance Industry Growth In Indonesia Is Still Negative

Deputy Chairman of DK OJK Mirza Adityaswara (Photo: Youtube screenshot by Mery Handayani/VOI)

JAKARTA - Deputy Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mirza Adityaswara revealed that the growth of the insurance industry in Indonesia is still negative. This is reflected in the premium of the insurance industry during January-July 2023 which was recorded at IDR 177 trillion.

Mirza said, the number contracted by around minus 2.3 percent compared to the same period the previous year. This negative growth, he continued, could not be separated from the sluggish life insurance performance, where there was a contraction of up to minus 7.8 percent with a total premium of IDR 102 trillion.

The general insurance and reinsurance grew positively by 6.3 percent. So what causes negative growth in the insurance industry here is due to life insurance," he said at the opening of the Indonesia Financial Group (IFG) International Conference 2023 in Jakarta, Tuesday, September 19.

On this occasion, Mirza said unit link products also affect the minus life insurance growth. Therefore, he said, the OJK recently released stricter rules to regulate unit link products.

"Many insurance industry players realize that this can be seen as having something to do with the link unit, so OJK issues stricter regulations regarding the product," he explained.

For your information, the link unit is a product that offers insurance to protect the public from unexpected events in the future, but also benefits from investing in adding assets.

Furthermore, Mirza explained that the penetration of the insurance industry in Indonesia is still relatively low compared to neighboring countries. Where penetration in Indonesia is only 2.3 percent of GDP, while Thailand has reached 4.6 percent of GDP, and Singapore 12.5 percent of GDP.

The characteristics of developed countries show that insurance penetration has a higher presentation rate. Malaysia is still 3.8 percent. Indonesia is still quite low, there is still great potential that can be explored," he said.

Therefore, Mirza emphasized that stakeholders in the insurance industry in Indonesia have homework (PR) to launch products that are in accordance with public needs.

On the other hand, continued Mirza, regulators also have an important role to play in making policies in the development of insurance industry.

"So I told colleagues at the OJK that we now have a new mandate not only to regulate, supervise and protect consumers, but also to develop," concluded Mirza.