Indonesia's life insurance industry could recover this year with 2.4% growth: GlobalData

INDONESIA'S life insurance industry could recover as early as this year with annual growth expected to reach 2.4 per cent, driven by increased consumer confidence, data and analytics company GlobalData said on Thursday.

According to the Indonesian Life Insurance Association, the industry registered a net profit of 62.7 trillion rupiah (US$4.3 billion) in Q1 this year, compared with a net loss of 460 billion during the same period in 2020.

Increased demand for life and health products due to the pandemic has prompted insurers to offer new products with Covid-19 specific benefits, GlobalData said.

Recovery in business activity due to the gradual reopening of the economy, and increased revenue from the bancassurance channel in the first half of 2021 has led to recovery in life insurers premium, it added.

GlobalData estimates that annual growth could come in at 2.4 per cent to 175.1 trillion rupiah this year.

By 2024, this figure is projected to reach 196.8 trillion rupiah, which would indicate an annual growth rate of 4.5 per cent.

This compares with the 7.6 per cent decline the industry saw last year to 171 trillion rupiah.

Still, pandemic-related restrictions are expected to derail a "full-scale recovery" this year, alongside the country's worsened economic outlook, Pratyusha Mekala, insurance analyst at GlobalData, said, adding that Indonesia continues to see a rising number of Covid-19 cases.

"Indonesian life insurance industry is expected to face increased challenges in the short-term due to the impact of Covid-19 on the economy," said Ms Mekala.

"Improving consumer confidence along with rising insurance awareness will aid the recovery of life insurance segment over the forecast-period," she added.