The health insurance sector in Indonesia has reported a steady upward trend in health insurance claims during the first quarter of 2023, according to data released by the Indonesian Life Insurance Association (AAJI). The data reveals a significant year-on-year increase of 38.6 percent, with health claims amounting to Rp4.6 trillion in Q1/2023. This surge highlights the growing burden of healthcare expenses on insurance providers.
Breakdown figures indicate that individual health insurance claims experienced a substantial surge of 42.7 percent, reaching Rp2.9 trillion compared to Rp2.03 trillion in the same period last year. Similarly, group health insurance claims rose by 32 percent year on year, reaching Rp1.7 trillion, compared to Rp1.28 trillion in Q1/2023.
Notably, health insurance claims have surpassed death benefit claims, which amounted to Rp2.89 trillion in Q1/2023. Although this represents a decline of 5.8 percent from the previous year’s figure of Rp3.07 trillion, it emphasizes the substantial impact healthcare costs have on insurance providers.
The total sum of claims and benefits disbursed by the life insurance industry has reached Rp45.56 trillion, reflecting a 5.1 percent increase from Rp43.35 trillion in Q1/2023.
Concurrently, the number of insured individuals in the life insurance sector has risen by 16.6 percent to 87.54 million during Q1/2023, compared to 75.08 million in the same period last year.
The rise in health insurance claims can be attributed to multiple factors, notably the lingering effects of the COVID-19 pandemic and the resulting inflationary pressure on healthcare costs. However, insurance analyst Dedi Kristianto believes that inflation alone does not account for the surge in claims.
Technological advancements in healthcare, delays in claim submissions due to various factors, including the pandemic, and instances of abusing claims have also contributed to the upward trend.
Dedi emphasizes, “The observed increase actually happens almost every year and not just in 2022. In 2022, the increase was more pronounced as COVID-19 began to be addressed, and people became more willing to seek medical treatment and file claims.”
To address the potential consequences of prolonged increases in claims, insurance companies must devise effective business strategies to manage and reduce their health claim ratios. Dedi proposes several strategic steps that insurance providers can consider.
Firstly, companies can reevaluate the pricing of health products that demonstrate high claim ratios and make necessary adjustments to product features. Additionally, strict control and monitoring of morbidity claim ratios should be implemented to mitigate the occurrence of claim abuse.
Dedi advises, “If insurance companies employ third-party guarantee providers, these providers must have clear clinical pathways and strictly implement case management to control hospital costs.”
Furthermore, insurance companies should engage in negotiations with hospitals to establish preferential rates and exclusive pricing for policyholders, thereby creating a competitive advantage over other insurance providers.
Moreover, insurers are encouraged to introduce new health products that are tailored to current inflationary conditions, accommodating both pricing and feature adjustments.
Lastly, insurance companies should develop comprehensive health programs aimed at encouraging policyholders to prioritize their well-being and adopt healthy lifestyles, ultimately reducing the frequency of health insurance claims.
These proactive measures will enable insurance providers to effectively manage the rising costs associated with health insurance claims, ensuring sustainable operations and enhanced customer satisfaction.