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Indonesia Insurance Report Q2 2010
Business Monitor International, March 2010, Pages: 114
Business Monitor International's Indonesia Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's insurance industry.
A major change in relation to BMI's last quarterly report is that they have reviewed all data that are publicly available at the beginning of 2010 in order to ensure that their estimates for 2009 and their forecasts for this year are reasonable. BMi have been able to include actual data for 2008 across all countries that they survey in the Asia-Pacific region.
This quarter, BMI include a regional review that looks at the actual and forecast growth rates for premiums across both major segments. A key insight is that growth in China’s life segment has slowed markedly over the last year or so. Nevertheless, the impact of the global financial crisis was much greater in South Korea, Australia, Singapore and Hong Kong. For the time being, BMI continue to expect that the most rapid growth will take place in countries such as Vietnam and the Philippines – where organised savings are at an embryonic state of development. For non-life insurers, the key insight is that price competition has caused penetration (ie premiums as a percentage of GDP) to fall in many countries: indeed, there has been a fall in absolute premiums in some instances.
As was the case in Q109, BMI provide a ranking of the major players in each of the two main segments as they are seen by the organisation providing the data (which, in practice, is usually the regulator or the trade association). In Indonesia, for instance, the three largest non-life companies in the first half of 2009 – in terms of gross written premiums written – were PT Asuransi Jasa Indonesia, PT Asuransi Sinar Mas and PT Asuransi Astra Buana, whose market shares were 10.3%, 10.2% and 7.3%, respectively. In the life segment, the leaders in the first half of 2009 were PT Asuransi Jiwa Mega Life, PT Asuransi Jiwa Sinar Mas and PT Prudential Life Insurance, whose market shares were 17.2%, 15.5% and 10.5%, respectively. Over time, BMI hope to derive insights from observing how market shares change. BMI emphasise, though, that a decline in share of gross written premiums is not automatically a bad thing and is often the result of a deliberate corporate decision to focus on more profitable business lines. In this report, BMI also provide a breakdown of the insurance sector by line – from the point of view of the regulator or the trade association. In Indonesia, for instance, the largest non-life lines in 2008 were property, motor and marine cargo. These accounted for 33.9%, 28.6% and 7.3%, respectively, of total non-life premiums. Over time, BMI should be able to use this information to bring greater sophistication to their forecasting process.
BMI are looking for total premiums in 2009 of IDR76,478,506mn. This includes non-life premiums of IDR21,717,324mn and life premiums of IDR54,761,182mn. In 2014, the corresponding figures should be IDR300,417,338mn, IDR89,726,881mn and IDR210,690,457mn. In terms of the key drivers that underpin their forecasts, BMI are looking for non-life penetration to change from 0.43% in 2009 to 1.02% in 2014, and for life density to rise from US$22 to US$99. BMI’s proprietary Insurance Business Environment Rating for Indonesia is 53.8 out of 100.
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