OJK Forecasts Single-Digit Growth in Life Insurance Premiums for 2024 Amid Post-Pandemic Equilibrium

Insurance Business (photo: Vlad Deep - Unsplash)

The Financial Services Authority (OJK) envisions a modest growth of single-digit percentages in life insurance premiums for the year 2024. This anticipation coincides with the subsiding impact of the Covid-19 pandemic in Indonesia and the establishment of a fresh equilibrium, particularly in the context of unit-linked products, all amidst the ongoing implementation of SEOJK Paydi.

Ogi Prastomiyono, the Executive Head of Insurance, Guarantee, and Pension Fund Supervision at OJK, highlighted, “Life insurance premiums are forecasted to increase by 4.4% in 2024, with an accumulated premium reaching Rp 165.92 trillion.”

Yet, Ogi underscored the dependency of this 4.4% growth projection on the post-2024 election economic landscape.

In a broader perspective, OJK and the insurance sector are presently embarked on implementing a roadmap aimed at developing and fortifying Indonesia’s insurance industry during the 2023–2027 period.

Throughout 2023–2024, strategic initiatives are set to unfold, encompassing the fortification of foundational elements within the insurance industry. This includes a focus on consumer protection, the enhancement of professional competencies, and regulatory reinforcement. The overarching objective revolves around reinstating and elevating public confidence in the insurance sector.

Delving into specifics, Ogi disclosed that the life insurance segment encountered a mild contraction in 2023. This contraction was a consequence of the deceleration in unit-linked insurance sales, a phenomenon occurring concurrently with insurance companies adapting to the implementation of SEOJK Paydi.

“For 2024, OJK perceives the potential for improvement across all facets of the insurance industry’s endeavors. This suggests that the trajectory of insurance growth, particularly in the life insurance domain, is poised to return to normalcy, accompanied by a well-maintained claims ratio,” concluded Ogi.

Meanwhile, the aggregate premium income for insurance during the January-to-November period of 2023 reached Rp 290.21 trillion, reflecting a 3.56% year-on-year (YoY) increase. A more detailed breakdown reveals that life insurance premiums saw a 7.18% YoY decline, amounting to Rp 160.88 trillion. In contrast, general insurance and reinsurance premiums surged by 20.97% YoY, reaching Rp 129.33 trillion.

In the realm of social insurance, the assets of BPJS Kesehatan totaled Rp 112 trillion by November 2023, while the assets of BPJS Ketenagakerjaan amounted to Rp 719.21 trillion, marking an 11.8% YoY increase.

Shifting the focus to the pension fund industry, assets reached Rp 363.03 trillion, showcasing a 6.19% YoY rise. The value of investments in this sector touched Rp 363.03 trillion, demonstrating a 5.68% YoY increase.