Despite a bleak macroeconomic picture, Indonesia’s non-life insurance market is well-diversified and underpinned by solid capitalisation, supporting a stable outlook assigned to the segment, according to a new AM Best report.
A new Best’s Market Segment Report, titled, “Market Segment Outlook: Indonesia Non-Life Insurance,” states that the non-life insurance market’s overall robust return on equity, supported by stable historical underwriting performance and strong balance sheet fundamentals, along with good government support including infrastructure plans and economic stimulus, are factors in the stable outlook.
The Indonesia non-life insurance market expanded by 14% year over year, to IDR 79.7 trillion (USD 5.4 billion) in 2019 from IDR 69.9 trillion (USD 4.9 billion) in the previous year, supported mainly by strong growth in credit insurance. Gross premium written (GPW) for credit insurance, the market’s third largest business line, increased by 86.2% to IDR 14.6 trillion in 2019. Property insurance, the largest business segment, also posted solid GPW growth of 9.7% to IDR 20.9 trillion. However, motor insurance GPW recorded muted growth of 0.3%.
AM Best believes that the non-life market in Indonesia benefits from a good business mix that will help to cushion any negative impact from the COVID-19 pandemic. Unlike other markets, which feature motor and health as the largest lines of business, Indonesia’s non-life segment is dominated by property and motor insurance, while credit, personal accident and health lines account for significant portions of total non-life GPW. Collectively, these five lines make up over 80% of the country’s non-life insurance premiums.
However, the decline in economic activity has had a direct impact on the non-life insurance segment. Non-life GPW in the first half of 2020 declined by 6.1% year over year, with the steepest falls in premiums were seen in the property and motor lines of business. Property insurance GPW