Indonesia’s Health Insurance Market: A Look Ahead
Indonesia’s personal accident and health (PA&H) insurance sector is on track to surpass IDR63.8 trillion (approximately US$4 billion) in gross written premiums (GWP) by 2029, according to GlobalData, a leading analytics firm. This segment is anticipated to grow at a compound annual growth rate (CAGR) of 13.4% from 2025, when the GWP is projected to reach IDR38.6 trillion (US$2.4 billion).
Forecasts from GlobalData suggest that the PA&H segment’s contribution to the overall insurance industry will increase notably, rising from 13.6% of total GWP in 2025 to 16.7% by 2029. The growth in 2025 alone is expected to reach 14.2%, driven by increasing demand for private health coverage and premium adjustments.
Key Drivers of Growth
- The Indonesian PA&H insurance market has seen double-digit growth since 2022 and is expected to continue this trend over the next five years, according to Manogna Vangari, an insurance analyst at GlobalData.
- Rising medical costs are exerting additional pressure on insurers. Data from the Indonesian Life Insurance Association indicates that double-digit medical inflation and higher treatment costs may limit affordability for many consumers in the future.
In response, insurers are adjusting premiums to maintain coverage levels. “This robust expansion is fueled by heightened health and financial awareness, which has increased demand for health insurance products. Additionally, adjustments in premium prices to counteract inflation, along with a resurgence in the tourism industry, are expected to further enhance the growth of PA&H insurance,” Vangari explained.
Shifting Strategies and Challenges
- Insurers are changing their distribution and risk management strategies, focusing more on small to mid-sized enterprises rather than large corporate accounts, which involve more complex underwriting.
- Reports of overtreatment have led insurers to implement cost control measures, moving away from cashless benefits towards reimbursement-based models.
Gross claims in the PA&H segment are expected to rise, with GlobalData projecting a CAGR of 10.9% between 2025 and 2029. Total claims are estimated to grow from IDR8.6 trillion (US$535.9 million) in 2025 to IDR13.1 trillion (US$816.3 million) by the end of the forecast period.
Vangari noted that medical inflation, particularly rising costs of imported pharmaceutical components and medical devices, is contributing to higher claims. “The increasing claims ratio is partly due to medical inflation, driven by soaring expenses for pharmaceutical ingredients and medical devices. Furthermore, the devaluation of the local currency exacerbates pricing challenges, as most pharmaceutical raw materials and medical devices are imported,” she said.
Regulatory and Market Developments
In response to rising claims and cost pressures, Indonesia’s Financial Services Authority (OJK), in collaboration with the government, is drafting a new Circular Letter (RSEOJK) aimed at aligning benefits between insurance providers and the nation’s public health system. This proposal includes mandatory co-payments of at least 10% for outpatient services, aimed at curbing unnecessary medical service usage and reducing insurers’ exposure to high claims ratios.
The growth of Indonesia’s tourism sector is also impacting the PA&H market. As reported by the Central Statistics Agency, international tourist arrivals reached 13.9 million in 2024, a five-year high. This increase in inbound travel is boosting demand for accident and short-term health insurance coverage.
Despite facing challenges, the PA&H segment is being shaped by advancements in digital platforms and product innovation. “Insurers are progressively adopting technology to develop more flexible products that meet market needs. Moreover, the implementation of stricter regulations is expected to enhance the industry’s stability,” Vangari concluded.
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