Indonesia's Non-Life Insurance Outlook Stabilizes Amid Growth Prospects

Indonesia's non-life insurance segment has seen a positive shift, with AM Best revising its outlook from negative to stable. This change is attributed to strong growth prospects, particularly in compulsory third-party liability (TPL) insurance for motorists, and regulatory changes aimed at enhancing the sector's financial stability. The economy grew by 5% in 2023, bolstered by domestic demand and increased business investment. The first quarter of 2024 showed robust results in the non-life insurance sector, driven by property, credit, health, and motor lines of business. The Indonesian government's "Golden Vision 2045" strategy aims to modernize infrastructure and boost renewable energy, which is expected to increase demand for commercial insurance. A proposed regulation requiring motorists to obtain TPL insurance, currently voluntary, is anticipated to significantly enhance insurance demand by 2025. This regulatory push is seen as a crucial step in narrowing the insurance protection gap in the country. However, the successful implementation of this proposal will depend on effective product design, robust risk management, and appropriate pricing strategies to address potential underwriting challenges. Chris Lim, an associate director at AM Best, emphasized the importance of these factors in ensuring the sector's growth. Chris Lim is scheduled to present insights on Indonesia's non-life insurance market during the 28th Indonesia Rendezvous in Bali from October 9-12, 2024, highlighting the ongoing developments and future outlook for the industry.