Market Trends of Indonesia Motor Insurance Industry
Potential Growth in the Insurance Sector
Overall insurance penetration in the country of 264 million people ranks among the lowest in the world at less than 2% (4.5 million Indonesians carry a policy). Half of Indonesia's population is under the age of 30, with the number of millennials (aged 17-35) in Indonesia currently at 79.5 million.
So, regulators are encouraging insurance companies to use digital channels and have said publicly that "there is no need to regulate insurance marketing through digital means."
To date, a number of tech startups operating in the realm of insurance have focused on financial comparison by providing online destinations to buy insurance products from licensed brokers. But financial comparison startups like C88 Technologies, which is backed by Experian, have mostly focused on banking and financial products that are easy to use.
The Indonesian insurance market is expected to be driven by government initiatives, technological advancements, and increased vehicle sales.
Potential Growth Opportunities for InsurTech Market
As of 2020, there are 322 fintech companies in Indonesia, ranging from deposits and lending to payment and capital raising. The top two fastest-growing fintech areas in Indonesia are peer-to-peer (P2P) lending and e-payment. Based on Bank of Indonesia statistics, the value of e-money transactions grew sixfold between 2012 and 2017 to IDR 12.3 trillion (USD 840 million).
InsurTech businesses grew in number in Indonesia over the past few years, particularly in response to mass mobility restrictions at the start of the COVID-19 pandemic in early 2020. Insurtechs raised the majority of their money between 2020 and 2022. InsurTechs make it simple to access insurance goods, typically micro-sized non-life products, but they encounter difficulties entering the market because they lack a license like traditional insurance companies do. However, the future growth of InsurTechs will mold the routes of distribution in the Indonesian insurance sector.
