ASEAN KEY DESTINATIONS
General insurers eye 20 percent increase in premium income
Indonesia’s general insurance business is expected to further expand this year amid the increase in the demand for property and vehicle protection.
The Association of Indonesian General Insurance Companies (AAUI) estimates the industry’s total premium income will increase by at least 20 percent to Rp 56.5 trillion (US$4.9 billion) this year from Rp 46.70 trillion in 2013.
“Similar to last year, the growth in gross premium income will be around 20 percent this year,” AAUI executive director Julian Noor said in Jakarta on Thursday. In 2013, the industry’s gross premium income rose by 20 percent to Rp 46.79 trillion.
Indonesian general insurers mostly protect property and vehicles against fire, burglary, flooding and earthquakes or other natural disasters, as well as providing personal insurance such as accident and health insurance.
“The demand for vehicle and property insurance in this country continues to rise. The demand for such insurance coverage is usually higher than other general insurance products,” Julian explained, adding that the gross premiums from vehicle and property insurance were the industry’s top-two gainers from year-to-year.
Vehicle insurance led other general insurance products at Rp 13.4 trillion in 2013, up 16 percent from Rp 11.5 trillion in 2012. “Due to a further increase in car sales in the country, I predict that the gross premium income from vehicle insurance will increase by more than 16 percent this year,” he said.
Meanwhile, the gross premium income from property insurance increased to Rp 12.6 trillion in 2013, up 17 percent from Rp 10.8 trillion in 2012. “I also predict that the gross premium income from property insurance will be higher by 17 percent this year,” said Julian.
Julian estimated the gross premium income from accident and health insurance would also grow significantly this year although its contribution to the total premiums would be lower compared to other insurance products.
The gross premium income from health and accident insurance increased to Rp 6 trillion in 2013, up 16.7 percent from Rp 5.1 trillion in 2012.
While the gross premium income from general insurance increased by 20 percent last year, total claims increased by only 6.7 percent to Rp 18.3 trillion in 2013 from Rp 17.1 trillion in 2012.
The highest growth in claims came from onshore oil and gas drilling operations last year, which increased by 576 percent from Rp 36.9 billion in 2012 to Rp 250.18 billion in 2013.
Likewise, the highest growth in gross premiums came from the onshore energy sector last year, which increased by 731 percent from Rp 127.64 billion in 2012 to Rp 1 trillion in 2013.
“The increasing growth in gross claims and gross premiums from the onshore energy sector is caused by an increased number of projects last year,” Julian explained, without saying how many onshore projects were executed last year.
“I predict that the gross premiums from onshore energy insurance will increase this year, and it will be higher than that of property and vehicle insurance,” said Julian.
The onshore energy sector was vulnerable to accidents so the demand for insurance would increase, Julian explained.
Of the total market share in insurance last year, vehicle insurance led with 28 percent, property insurance at 27 percent, accident and health insurance (12.9 percent), credit insurance (4.79 percent) and onshore energy with 2.27 percent, according to data provided by the AAUI.
“I predict that vehicle and property insurance will continue to lead the total market share of general insurance this year, like last year,” said Julian.
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