General Insurance and Reinsurance Premiums in 2014

The year 2014 marked a pivotal moment for the Indonesian insurance market. Both general insurance (asuransi umum) and reinsurance (reasuransi) sectors recorded notable growth in premium income, driven by rising awareness, regulatory reforms, and an expanding middleclass population. This page offers a concise overview of the key figures, trends, and factors that shaped the premium landscape in 2014.

Key Statistics

Drivers of Growth

• Regulatory Improvements: The Financial Services Authority (OJK) introduced stricter solvency requirements and better consumer protection rules, which boosted confidence among policyholders.
• Economic Expansion: Indonesias GDP grew by approximately 5.2% in 2014, increasing disposable income and demand for vehicle, property, and health coverage.
• Rising Vehicle Ownership: Motor vehicle registrations rose by 9% yearonyear, directly lifting motor insurance premiums.
• Reinsurance Capacity: International reinsurers expanded their capacity in Indonesia, offering more competitive terms and supporting local insurers in writing larger policies.
• Digital Distribution: Emerging online platforms began to channel small and mediumsized business (SMB) customers to insurers, widening the market reach.

Segment Analysis

Motor Insurance

Motor insurance continued to dominate the premium pool, accounting for roughly 55% of total written premiums. The growth was propelled by two main factors: an increase in private car ownership and the mandatory thirdparty liability (TPL) coverage required by law. Premiums for comprehensive policies grew faster than TPL, reflecting a shift in consumer preference toward broader protection.

Property & Casualty (P&C)

Property and casualty lines, including fire, burglary, and naturaldisaster coverage, posted a healthy 4.9% increase. The market benefitted from heightened awareness after several highprofile flood events in 2013, prompting both individuals and businesses to seek coverage against natural hazards.

Health & Personal Accident

While still a smaller segment compared with motor and P&C, health and personal accident insurance showed steady growth (around 5%). The expanding middle class and the introduction of employersponsored health plans contributed to this trend.

Reinsurance Landscape

Reinsurance premium flow in 2014 reached IDR 13.5billion, a 5.2% rise over the previous year. The majority of ceded premiums went to global reinsurers, with a growing share taken by regional players from Singapore and Malaysia. Key observations include:

• Higher Retention Ratios: Local insurers increased their retention levels, using reinsurance primarily for excessofloss protection rather than quotashare arrangements.
• Specialty Lines Expansion: There was a noticeable uptick in retrocession of specialty lines such as aviation, marine, and largescale construction, reflecting the complexity of risk and the need for expertise.
• Capital Market Integration: The launch of the Indonesia Capital Market Authoritys Solvency IIlike framework encouraged insurers to align reinsurance strategies with capital efficiency goals.

Challenges Faced in 2014

1. Underinsurance: Despite growth, studies indicated that more than 40% of motor owners were underinsured, exposing a gap in market penetration.
2. Catastrophe Risk Modeling: Limited availability of sophisticated catastrophe models made pricing for naturaldisaster coverage challenging.
3. Talent Shortage: The industry continued to grapple with a shortage of actuarial and underwriting talent, especially in niche segments.

Outlook Beyond 2014

Analysts projected a continued compound annual growth rate (CAGR) of 67% for general insurance premiums through 2020, underpinned by digital transformation, greater financial inclusion, and the rollout of the new Insurance Law (UU No. 40/2014) which aimed to strengthen policyholder rights. Reinsurance was expected to become more strategic, with domestic reinsurers seeking to capture larger portions of the ceded business.

Further Reading

• Financial Services Authority (OJK) Annual Report 2014
• Indonesia Capital Market Authority
• ASEAN Insurance Initiatives

Overall, 2014 can be seen as a year of consolidation and modest expansion for Indonesias general insurance and reinsurance markets. The combination of regulatory progress, economic growth, and evolving consumer expectations created a solid foundation for the sectors continued development.