The personal accident and health (PA&H) insurance market in Indonesia is poised for significant growth. By 2029, the sector is expected to reach $4.0 billion, growing at a compound annual growth rate (CAGR) of 13.4%, according to a new report by GlobalData.
Key Factors Driving Growth in Indonesia’s PA&H Insurance Market
The Indonesian PA&H insurance sector is forecasted to see substantial growth, driven by increased demand for private health coverage and rising premiums. In 2025 alone, the sector is expected to grow by 14.2%. This growth is attributed to a combination of factors, including growing awareness of health risks and inflationary pressures that are pushing insurance premiums higher.
Demand for Private Health Insurance Increases
According to Manogna Vangari, an Insurance Analyst at GlobalData, the strong double-digit growth in the sector since 2022 is a result of greater awareness of health and financial risks. Indonesians are becoming more conscious of the importance of health insurance, prompting a rise in policy uptake. This shift is leading to increased competition among insurers and a steady increase in premium rates.
Challenges Due to Rising Healthcare Costs
Despite the sector’s growth, the rising cost of healthcare presents challenges. Medical inflation and escalating healthcare costs are making it harder for policyholders to afford coverage. As a result, insurers are adjusting premiums to offset these rising costs. The Indonesian Life Insurance Association has reported that insurers are raising premiums to maintain their coverage as healthcare expenses continue to climb.
Shift Toward Small and Medium-Sized Employers
Another key trend is the focus on small and medium-sized employers. Insurers are increasingly targeting these businesses as underwriting large groups becomes more difficult. This shift is also driven by the need to manage rising costs while ensuring access to affordable insurance options for smaller employers.
Rising Claims and Insurance Costs
PA&H insurance claims are expected to rise by 10.9% from $535.9 million in 2025 to $816.3 million by 2029. This increase is largely driven by higher costs for pharmaceutical ingredients and medical devices, many of which are imported. Additionally, the weakening of the local currency has further strained the costs of medical supplies, contributing to higher insurance claims.
Regulatory Changes to Manage Rising Claims
The Financial Services Authority (OJK) is preparing a new Circular Letter (RSEOJK) to help insurers manage rising claims and the escalating costs of healthcare. The regulation aims to standardize co-payment requirements among insurers and introduce a minimum 10% co-payment for outpatient services. This move is designed to reduce excessive use of services and help insurers manage costs more effectively.
Impact of Tourism on the PA&H Insurance Market
Tourism is also playing a role in the growth of the PA&H insurance sector. Foreign tourist arrivals in Indonesia reached 13.9 million in 2024, marking a 20.17% increase from the previous year. This growth in tourism has led to greater demand for insurance products, especially for travelers. As the tourism sector recovers, the demand for personal accident and health insurance is expected to continue rising.
Digital Solutions and New Product Models
To address the growing demands of the market, insurers are turning to digital solutions and innovative product models. This shift is helping companies streamline operations, improve customer experience, and better meet the needs of the market. The introduction of new product offerings is also playing a significant role in attracting more customers to the sector.
Outlook for the Future
As the PA&H insurance sector in Indonesia continues to grow, regulatory measures and industry innovations are expected to improve stability and reduce costs. The government’s efforts to regulate and standardize insurance practices will help ensure the sector’s continued growth, even in the face of rising claims and healthcare costs. Overall, the Indonesian PA&H insurance market looks set to remain a key player in Southeast Asia’s insurance landscape.
With tourism on the rise and growing awareness of health risks, Indonesia’s PA&H insurance sector is poised for significant growth in the coming years. Insurers must adapt to these changes and invest in technology to stay competitive in an increasingly complex market.
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