Rising disposable incomes, consumption growth and sustained investment are key factors in the sector’s recent continued expansion and future potential growth. While still small compared to its potential, Indonesia’s insurance market is attracting global underwriters and reinsurers. The life segment, which comprised roughly two-thirds of premiums in 2012, is the market’s key growth driver. The segment has seen annual expansion of 25.6% in the decade to 2012. The inflow of foreign direct investment into the Indonesian market, particularly from Japan, has led to a wave of mergers and acquisitions in the insurance sector that can be expected to increase competition. In January 2013, oversight of the sector was handed over to a new independent regulator, the Financial Services Authority, which will work to help institute new regulations for the market. Stricter regulations imposed under a comprehensive framework by the new regulator will bolster underwriters’ financial and technical capacity, while growing affluence, rising awareness of natural disasters, and the need for financial planning will be key drivers of long-term growth.
This chapter contains an insurance dialogue between David Beynon, President Director, Tokio Marine Life Insurance Indonesia, and William Kuan, President Director, Prudential Indonesia; and interviews with Elvyn G Masassya, President Director, Social Security Agency; and Tim Shields, President Director, ACE Jaya Proteksi.