The insurance landscape in Indonesia is undergoing a significant transformation, driven by a myriad of factors that promise a bright future for the industry. In this series of major industries in Indonesia, we’ll delve into the Indonesian insurance industry, its growth prospects, lucrative business opportunities, regulatory framework, key players, and how to embark on your insurance venture in this burgeoning market.
Indonesia Insurance Industry Outlook
The Indonesian insurance industry is expected to grow at a compound annual growth rate (CAGR) of 8.1% from 2023 to 2027, reaching a gross written premium (GWP) of IDR 135.3 trillion ($9.0 billion) by 2027. This growth will be powered by various factors, such as:
- A growing middle class with increasing disposable income
- Increased awareness of the importance of insurance
- The government’s efforts to promote financial inclusion
- The development of new insurance products and services
The Indonesian insurance industry is still relatively underdeveloped, with an insurance penetration rate of just 3% in 2022. This means that there is significant room for growth, as Indonesians become more aware of the importance of insurance and the government continues to promote financial inclusion.
Insurance Business Opportunities in Indonesia
There are a number of insurance business opportunities in Indonesia, including:
With a large and youthful population, Indonesia is witnessing a surge in demand for health insurance. The government’s national health insurance program is set to further amplify this demand.
While life insurance penetration is still low, there is a growing interest, especially among the middle class, in life insurance products.
General insurance products, such as property and motor insurance, are in high demand due to the country’s rapid economic growth and urbanization.
Designed for low-income households, microinsurance products are affordable and easily accessible, making them an excellent option for newcomers to insurance.
Indonesia Insurance Business Regulation
The Indonesian insurance industry is regulated by the Financial Services Authority / Otoritas Jasa Keuangan (OJK). The OJK has issued a number of regulations governing the insurance industry, including:
- Regulation No. 6/POJK.05/2016 on the Licensing and Establishment of Insurance Companies
- Regulation No. 7/POJK.05/2016 on the Corporate Governance of Insurance Companies
- Regulation No. 8/POJK.05/2016 on the Risk Management of Insurance Companies
- Regulation No. 9/POJK.05/2016 on the Investment of Insurance Companies
- Regulation No. 10/POJK.05/2016 on the Reporting of Insurance Companies
Foreign investors are allowed to own up to 80% of an Indonesian insurance company. However, foreign investors must obtain a license from the OJK in order to invest in the Indonesian insurance industry.
Also read: Understanding Indonesia Business Law
Leading Insurance Companies in Indonesia
According to GlobalData, these are some of the leading companies in the Indonesian insurance industry:
- PT Asuransi Sinar Mas
- PT Tugu Pratama Indonesia
- PT Asuransi Kredit Indonesia
- PT Zurich Asuransi Indonesia Tbk
- PT Asuransi Astra Buana
Also read: 10 Top Insurance Companies in Indonesia
How to Start an Insurance Company in Indonesia
To start an insurance company in Indonesia, you must obtain a license from the OJK. To obtain a license, you must meet the following requirements:
- Have a minimum paid-up capital of IDR 100 billion ($6.6 million) for life insurance companies and IDR 50 billion ($3.3 million) for general insurance companies.
- Have a qualified management team with experience in the insurance industry.
- Have a sound business plan.
Once you have obtained a license from the OJK, you can start your insurance company. You will need to develop insurance products and services, market your products and services, and build a customer base.
The Indonesian insurance industry is a growing and dynamic market with a number of opportunities for insurance companies. If you are interested in starting an insurance company in Indonesia, you should carefully review the Indonesian insurance business regulations.
To simplify the process and ensure compliance, it is advisable to seek assistance from experienced professionals.
InvestinAsia is among the companies that specialize in aiding you with company registration in Indonesia. We boast a team of seasoned experts who can guide you throughout the process of:
- PMA registration in Indonesia (foreign company)
- Indonesia representative office set up
- Virtual office rent in Indonesia
- Business registration number in Indonesia
- Business License in Indonesia
If you are interested in starting an insurance business in Indonesia, you can start by contacting us for FREE consultation.