Social Security Drives Increase in Premiums
FEBRUARY 05, 2015
Jakarta. Insurance premiums in Indonesia grew significantly last year, helped by the government’s social security initiatives that boosted the number of insurance policy holders in the country.
Insurance companies operating in the country booked a combined Rp 270.72 trillion ($21.48 billion) in income from premiums in 2014, according to the Financial Services Authority (OJK), an increase of 47.1 percent from the year before.
Premiums under the social insurance category saw a nearly sevenfold increase to Rp 69.33 trillion from Rp 10.35 trillion.
“Compared to 2013, [the insurance industry in] 2014 grew pretty good,” said Firdaus Djaelani, a commissioner at the OJK overseeing non-banking financial institutions.
He credited the series of insurance programs rolled out under the Social Security Organizing Body (BPJS) — including universal health care through BPJS Kesehatan and workplace insurance and benefits through BPJS Ketenagakerjaan — for boosting the value of income from premiums.
BPJS Kesehatan merged the services of all state-run health insurance providers, and extended those services to Indonesians traditionally not covered by state-provided schemes, such as those working in the informal sector and those living in poverty, whose premiums are subsidized by the government.
Life insurance premiums still dominated the industry in terms of income share, generating Rp 130.04 trillion in 2014, up 22.6 percent from the previous year.
Thursday’s data also showed that the combined assets of the domestic insurance industry grew 17.5 percent last year to Rp 755.43 trillion.
That figure is relatively small compared to entire banking sector, with total assets of Rp 5,313.59 trillion as of November 2014.