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Indonesia Insurance Report Q3 2012
The Indonesia Insurance Report considers the prospects for both life and non-life insurers in the country.
As of mid-2012, the latest developments confirm that Indonesia remains one of the most exciting markets for life insurance in global terms. Premiums have been growing at around 25% per annum, as an expanding middle class increasingly takes advantage of the offerings of the life insurers. Most companies in the segment have reported strong, profitable expansion of their businesses, thanks to at least one of the following factors: rapid expansion in agency forces; improved agency productivity; new bancassurance relationships with major banking groups; development of new products.
The limited data for 2011 that is available suggests the life segment has benefited from rapid growth in lives covered by group insurance products, but not necessarily a rapid expansion in the number of households that are using life insurance. According to the regulator BAPEPAM-LK, around 10% of the population were covered by life insurance as at the end of 2010. Although Allianz alone has over 400,000 micro-insurance clients, it appears that micro-insurance is an opportunity for the future, not the present. Various commentators have alluded to a changing and uncertain regulatory environment as being a challenge for the insurers.
In spite of the generally positive economic environment, and burgeoning sales of motor vehicles, the outlook for the fragmented non-life segment is a little less exciting than that for the life segment. Many non-life companies are backed by local conglomerates or financial institutions that do not necessarily have a competitive advantage in the underwriting of risks – and this is in a country that is prone to natural disasters. In the past, the fragmentation of the segment has contributed to brutal competition in motorrelated lines (which, although less important than in other countries are still the largest component of the segment) and constrained growth in overall premiums. The latest data from the trade association suggests that for much of 2011 premiums in motor-related lines grew nearly as rapidly as those in the rest of the segment. Our forecasts for the segment assume non-life penetration will continue to grow.
As of mid-2012, it remains to be seen what will be the ultimate impact of the regulator’s increased capital requirements. We would not be surprised if there is a wave of consolidation, especially if premium growth slows, even if only temporarily.
Over the last quarter, BMI has made the following changes:
- Many of the leading insurance companies have published details of their operations, both in Indonesia and across the Asia Pacific region, in relation to Q112 or 2011. The details have been incorporated into our analysis.
- The analysis includes final figures published by the Asosiasi Asuransi Jiwa Indonesia (AAJI) in relation to life premiums written during calendar 2011.
- The analysis takes into account BMI’s latest assessment of the economic environment in Indonesia.
Table: Total Premiums, 2009-2016 5
Key Insights And Key Risks 5
SWOT Analysis 7
Indonesia Insurance Industry SWOT 7
Indonesia Political SWOT 8
Indonesia Economic SWOT 9
Indonesia Business Environment SWOT 10
Life Sector 11
Asia Pacific Life Sector Overview 11
Table: Asia Pacific Life Premiums, 2008-2016 (US$mn) 11
Indonesia Life Sector Update 16
Life Industry Forecast Scenario 17
Table: Total Life Premiums, 2009-2016 18
Growth Drivers And Risk Management Projections 18
Table: Insurance Key Drivers, Demographics, 2009-2016 19
Non-Life Sector 20
Asia Pacific Non-Life Sector Overview 20
Table: Asia Pacific Non-Life Premiums, 2008-2016 20
Indonesia Non-Life Sector Update 22
Non-Life Industry Forecast Scenario 23
Table: Total Non-Life Premiums, 2009-2016 24
Growth Drivers And Risk Management Projections 25
Macroeconomic Outlook 25
Table: Indonesia Economic Activity, 2011-2016 27
Political Stability Outlook 28
Table: Asia Pacific Regional Security Ratings 29
Health Insurance 31
Table: Insurance Key Drivers, Disability-Adjusted Life Years, 2009-2016 34
Islamic Finance 36
Insurance Risk/Reward Rating 38
Table: Indonesia’s Insurance Risk/Reward Ratings 38
Table: Asia Pacific Insurance Risk/Reward Ratings 39
Competitive Landscape 41
Competitive Landscape Analysis 41
Major Players In Indonesia’s Insurance Sector 44
Table: Non-Life Companies Ranked By Gross Written Premiums, 2009 46
Table: National Life Companies Ranked By First-Year Gross Written Premiums, 2009 48
Table: Joint Venture Life Companies Ranked By First-Year Gross Written Premiums, 2009 50
Company Profiles 51
Local Company Profiles 51
Bumiputera 1912 51
Jasa Indonesia 52
Jasa Raharja 53
Jiwa Sequis Life 55
Sinar Mas 56
Tugu Pratama 57
Regional Company Profiles 58
AIA Group Limited 61
BNP Paribas Cardif 68
HSBC Insurance 71
Liberty Mutual 73
MetLife ALICO 75
Prudential Financial 77
Prudential plc 79
Sun Life Financial 84
The Principal Financial Group 85
Zurich Financial Services 86
Demographic Outlook 88
Table: Population By Age Group, 1990-2020 (‘000) 89
Table: Population By Age Group, 1990-2020 (% of total) 90
Table: Key Population Ratios, 1990-2020 91
Table: Rural/Urban Population Split, 1990-2020 91
BMI Methodology 92
Insurance Risk/Reward Ratings 93
Table: Insurance Risk/Reward Indicators And Rationale 94
Table: Weighting Of Indicators 95
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