Indonesia Motor Insurance Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Indonesia Motor Insurance Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Indonesia Motor Insurance Market is expected to register a CAGR of 5.3% over the forecast period 2019-2024.

The Indonesian non-life insurance market reported a turnover of 69.9 trillion IDR (4.8 billion USD) in 2018, an increase of 9.8% than 2017.

The motor insurance has amounted 18.67 trillion IDR (1.2 billion USD) premiums in 2018 with a significant market share of 29% in the overall non-life sector.

The growth of motor insurance premiums was accounted for by the increase in vehicle sales. The sales of the two-wheeled vehicles increased by 8.44% to reach 6.38 million units. The sales of cars grew by 6.74% at 1.15 million units in 2018.

Key Market TrendsPotential Growth in the Insurance Sector

The Insurance literacy in Indonesia actually fell from 17.9% in 2013 to 15.8% in 2017. 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.

As such, regulators are encouraging the use of digital channels in insurance and have publicly voiced that “no regulation is needed 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. However, financial comparison startups such as Experian-backed C88 Technologies have largely focused on simpler financial and banking products.

Today, life insurance is the dominant segment in Indonesia and accounts for two-thirds of the sector. Indonesia is second only to India among the fastest growing P&C markets by premium and the fastest growing market for life premiums.

Islamic insurance or takaful is another niche that has great potential to grow in Indonesia, which has a Muslim-majority population. While the number of takaful operators has increased. According to Indonesia’s financial regulator, it is growing faster than conventional insurance, but it is not growing substantially. The fine distinction between conventional insurance and takaful may be lost to a public where few have a clear understanding of life insurance.

Potential Growth Opportunities for InsurTech Market in The Country.

Indonesia features the largest (USD 27 billion in 2018) and the fastest-growing (49% CAGR 2015-2018) internet economy in Southeast Asia. Recent data from Indonesia’s leading e-commerce player Shop supports optimistic growth prospects. The platform recorded 63.7 million orders, or a daily average of 700,000 orders, in Q3’18, and reached 12 Million orders on Indonesia’s National Online Shopping Day in December.

The three leading mobile payments players in Indonesia are Go-Jek‘s Go-Pay, Lippo’s OVO (partnered with Grab), and Dana, the joint venture of Ant Financial and Emtek. Competition is already starting to grow fierce, with all three recently expanding and integrating with e-commerce platforms including Bukalapak, JD.id, and Tokopedia.

In its 2018 report, OVO claimed it had facilitated 1 billion transactions for the year or a 75X increase since November 2017. Meanwhile, Dana reportedly acquired 1M users in 3.5 months and recently surged to the #1 App Store ranking after a big 11.11 promotion. Another player in the mobile wallet battle is T-Cash, the e-wallet service of Indonesia’s largest mobile operator Telkomsel, which recently opened up its e-wallet to the customers of rivals. T-Cash counts 20M registered users (though just 4M active users).

Competitive Landscape

The Indonesia Motor Insurance Market is highly competitive, with the presence of major international players. The Indonesia Motor Insurance Market presents opportunities for growth during the forecast period, which is expected to further drive market competition. With a few players holding a significant share, the Indonesia Motor Insurance Market as observable level of consolidation.

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• The market estimate (ME) sheet in Excel format
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