Insurance

At 1.7%, Indonesia’s insurance penetration rate is the lowest in the region, compared to 3.7% in Thailand, 5.1% in Malaysia and 11.1% in South Korea. Underwriters hope that as disposable income grows, the middle class – now estimated at up to 40% of the population – will purchase more coverage. In fact, gross premiums have grown an average of 23% annually since 1996, reaching a total of $16.02bn in 2010. This potential has brought foreign insurers into the market, mainly through buying up local players, and opportunities for mergers and acquisitions still remain. Sectors with potential include Islamic insurance, or takaful, which grew 47.6% in 2010. Other areas for growth include microinsurance, which would benefit from the more than 120m Indonesians living on less than $2 per day. This chapter includes an interview with Hotbonar Sinaga, CEO, Jamsostek.