Page 17 - Insurance Times March 2021

bushfires affected Australia’s economic which is expected to continue in 2021. placed on construction and other
growth in the first half of 2020. Ms. Mitra concludes: “The reopening commercial activities. The industry,
Effective management of the of several economic sectors will aid however, is poised to benefit from
outbreak, government’s fiscal support demand for general insurance in 2021. investments in infrastructure, proposed
and faster adoption of innovative as part of government’s economic
Cyber-security, mental health well-
business models helped improve being and domestic travel are reforms.
economy with most businesses
expected to be key focus areas for Credit insurance accounted for 21% of
reopening in September 2020.” insurers over the next five years. As the total general insurance premiums
This also reflected positively on general digitalization picked up pace in 2020, in 2019. It registered a CAGR of 72.1%
insurance business. Improvements in it also increased exposure to between 2017 and 2019, owing to the
investment income and underwriting cybercrimes thereby driving demand increased awareness and
results helped net earned premiums to for cyberinsurance.” implementation of 2016 National
grow by 6.1% in July-September Financial Inclusion Strategy, which
quarter, after a decline of 4.8% in the General insurance industry expanded funding for small and
previous quarter. medium-sized enterprises (SME’s) and
in Indonesia to reach
Motor insurance is the largest general mirco SMEs. However, the economic
insurance line with 24.4% share of the US$5.17bn in 2025 volatility and heightened risk of bad
direct written premium (DWP) in 2020. The general insurance market in debts could weigh in on credit
It reported lower growth of 2.9% in Indonesia, in terms of gross written insurance growth in 2021.
2020 due to tighter lending conditions, premium, is projected to grow from Personal accident and health insurance
which are expected to continue in IDR63.87 trillion (US$4.50bn) in 2020 (PA&H), which accounts for 8% of
2021. to IDR77.53 trillion (US$5.17bn) in general insurance premiums, is
2025, according to GlobalData, a
Motor insurers are launching forecasted to grow in 2021 backed by
leading data and analytics company.
innovative products to drive sales. increase in awareness for health
Some of these include Pay-as-you-go GlobalData has revised Indonesia’s insurance products. As policies
and Short-term car insurance, where insurance forecast in the aftermath of providing COVID-19 hospitalization and
premiums are charged based on actual COVID-19 outbreak. As per the latest telemedicine benefits gained
distance traveled, recorded via data, Indonesia’s general insurance prominence, the category is expected
telematics device installed in the car. industry is forecasted to register a to grow at a CAGR of 7.03% during
This helps policyholders to save on decline of 4.6% in 2020, primarily due 2021-2025 and partially mitigate
premium and get customized to the economic impact of the
decline from other business lines.
insurance. pandemic. However, the market is
Property insurance, the second largest expected to recover and grow by 2.9% The fiscal policies announced by the
insurance line with 21% share of the in 2021. government have helped control
DWP, was marked by heavy natural Rakesh Raj, Insurance Analyst at economic decline. With many sectors
catastrophe losses in 2020. According GlobalData, comments: “Indonesian opening up, incremental gains were
to Insurance Council of Australia (ICA), economy fell into recession in 2020 reported across sectors in Q4 2020,
the October-November 2020 hailstorm owing to the lockdown restrictions due indicating rebound in insurance
industry as well.
in Queensland resulted in over 8,500 to the COVID-19 pandemic.
claims on 1 November 2020 alone. Of Restrictions on commercial activities Mr Raj concludes: “The long-term
this, 40% were accounted for by motor and downturn in domestic outlook for the Indonesian general
claims and the remaining 60% by consumption led to a steep decline in insurance industry is positive. The
property insurance. demand for general insurance.” proposed regulations permitting
High losses from wildfires and other The impact of pandemic was most general insurance companies to issue
catastrophic events have persistently prominent in property insurance, PAYDI and unit-linked long-term
pushed premium prices higher during which accounts for 33% of general general insurance products could usher
the last five years. Catastrophe-linked insurance premium. Property in product innovations and help
insurance lines reported double-digit insurance is estimated to have declined increase insurance penetration over
increment in prices since Q4 2017, by 6.2% in 2020 due to restrictions the forecast period.” T

The Insurance Times, March 2021 17